Canadian cannabis producer Tilray Inc. (TLRY) has announced plans to buy a chain of cannabis retail stores in Alberta.
The Nanaimo, B.C.-based licenced producer said it has entered into a definitive agreement to acquire all issued and outstanding shares of 420 Investments Ltd., or FOUR20, an Alberta-based pot retailer with six stores and 16 additional locations secured for future outlets.
“FOUR20 offers a premium retail experience for the mainstream cannabis consumer and builds on our broader retail strategy, which includes several minority investments in other leading cannabis retailers,” Tilray chief corporate development officer Andrew Pucher said in a news release on Thursday.
“With FOUR20, we will elevate the retail experience for consumers by offering the best quality-tested products while preparing for the next wave of legalized product launches taking place by year’s end.”
Tilray is making the acquisition through its High Park Holdings Ltd. subsidiary. Under the terms of the agreement, Tilray will deliver up to $110 million consisting of $70 million in Tilray Class 2 common stock at closing, and $40 million in common stock subject to the achievement of performance milestones by FOUR20.
Tilray said it plans to use FOUR20's retail expertise to expand into other provinces where licenced producer retail ownership will be permitted in the future.
FOUR20 announced in mid-February that it reached $5 million in sales. The company operated two stores in Calgary at the time.
Alberta is the number one provincial market for legal cannabis sales, according to Statistics Canada. The agency found sales between October 2018 to June 2019 hit $123.6 million.
Tilray expects the transaction to be complete by the end of first quarter 2020. The deal is subject to regulatory, shareholder and court approval.
NASDAQ-listed shares climbed 1.84 per cent to $27.70 in pre-market trading at 8:40 a.m. ET.