LAVAL, Quebec, and EDMONTON, Alberta — Alimentation Couche-Tard Inc. and independent adult-use cannabis retailer Fire & Flower Holdings Corp. have confirmed the closing of their transaction announced on July 24.
Fire & Flower will leverage Couche-Tard’s international infrastructure and experience for global expansion opportunities. The investment will provide Fire & Flower with additional capital to further accelerate its expansion strategy, significantly accelerating the number of stores it is able to open as well as the number of markets it is potentially able to access.
“Through this strategic investment, we reinforce our intention to become a key player in North America's cannabis industry,” said Brian Hannasch, president and CEO of Couche-Tard. “We are excited to see what we can achieve together with Fire & Flower as we further expand in Canada and look to leverage our presence in the United States and beyond.”
Trevor Fencott, Fire & Flower's CEO, said, “Combining Couche-Tard's expertise in scaling retail stores with Fire & Flower's retail experience and proprietary Hifyre digital platform positions our company extremely well to capitalize on new cannabis markets as they emerge.”
In connection with the closing of the transaction, Fire & Flower has appointed Jeremy Bergeron as Couche-Tard's initial nominee to Fire & Flower's board of directors.
Bergeron was president and CEO of CrossAmerica Partners LP, the Allentown, Pa.-based wholesale fuel unit of Couche-Tard, until July 2108, when he became vice president of alternative channels for Couche-Tard.
Based in Edmonton, Alberta, Fire & Flower Holdings Corp. owns all issued and outstanding shares in Fire & Flower Inc., a licensed cannabis retailer in the provinces of Alberta, Saskatchewan and Manitoba and the Yukon territory, and is a consultant and licensor to Fire & Flower-branded retail locations in the province of Ontario. The company guides consumers through the complex world of cannabis through education-focused retailing using its proprietary Hifyre digital platform, it said. Fire & Flower focuses on the safe, responsible and lawful sale of cannabis.
The transaction includes Fire & Flower issuing an 8% unsecured convertible bond to an indirect wholly owned subsidiary of Couche-Tard in the aggregate principal amount of approximately $26 million, convertible into approximately 24.29 million common shares (if converted in full) at a price of $1.07 per share, representing a 9.9% ownership interest in Fire & Flower on a pro forma fully diluted basis. Couche-Tard has also been issued common share purchase warrants that, if exercised in full, would increase ownership interest to 50.1%.
Common shares in the capital of Fire & Flower have commenced trading on the Toronto Stock Exchange.
- Couche-Tard is No. 2 in CSP's 2019 Top 202 ranking of U.S. c-store chains by number of retail outlets.
Laval, Quebec-based Couche-Tard’s network consists of approximately 9,900 mostly Circle K convenience stores throughout North America. Through CrossAmerica, Couche-Tard supplies fuel under various brands to approximately 1,300 U.S. locations. In Europe, Couche-Tard operates more than 2,700 c-stores and fuel outlets in Scandinavia, Ireland, Poland, the Baltics and Russia. Licensees operate more than 2,150 Circle K c-stores in 15 other countries and territories (Cambodia, China, Costa Rica, Egypt, Guam, Honduras, Hong Kong, Indonesia, Macau, Mexico, Mongolia, New Zealand, Saudi Arabia, the United Arab Emirates and Vietnam), which brings its worldwide total network to more than 16,000 stores.