Kiaro Holdings (KO.V) inked an agreement to acquire Sculthorp SEO, the parent company behind Cozy Cannabis, today for $1.35 million today, according to a press release.
The logic behind the transaction is more than Sculthorp’s single a retail location in Toronto and three e-commerce business platforms. It’s more that it’ll give Kiaro the jumpstart it needs to get into the Ontario retail market and give access to a digital portfolio focused on accessories to not only Canadian customers, but those in Australia and the United States as well.
“Operational excellence has always been Kiaro’s driver — operating with one of cannabis retail’s highest gross margin rates demonstrates that ability. With this acquisition, Kiaro adds international exposure with a high-margin accessory e-commerce portfolio,” said Daniel Petrov, CEO of Kiaro.
Kiaro Holdings is a Vancouver, B.C. based independent cannabis retailer and distributor. They have stores in B.C. and Saskatchewan, a distribution service division for Saskatchewan and plans to expand nationally, of which Toronto is the opening serve. Also, the founder of Cozy Cannabis, Christian Sculthorp, will be joining the Kiaro team as a director of e-commerce for six months.
Transaction highlights:
- Provides Kiaro a strategic entry into the U.S. and Australian market: The transaction provides Kiaro with new revenue segments from the U.S. and Australian jurisdictions with consumption accessory sales. As a result of the transaction, Kiaro is well positioned to take advantage of any future U.S. and Australia advances toward federal legalization.
- Solidifies Kiaro’s strategic entry into Ontario: The prime location in the heart of Trinity Bellwoods neighbourhood of Toronto is Kiaro’s first brick-and-mortar store in the Ontario cannabis retail market. The location on Dundas Street West will also serve as the e-commerce hub for Ontario, thereby strengthening its best-in-class omnichannel retail approach.
- Expands the company’s e-commerce reach both nationally and internationally: The addition of the Vaped.ca, Vaped.com and VaporizersDirect.com.au websites, complements Kiaro’s current e-commerce platform and will strengthen Kiaro’s technology-forward approach. As part of the transaction, members of the Cozy Cannabis executive team will provide transitionary services to support the continued growth of both the existing e-commerce platform and the newly acquired consumption accessory e-commerce sites with further investment and expansion.
- Executes on the plan of revenue and EBITDA (earnings before interest, taxes, depreciation and amortization) growth through acquisition: The portfolio adds to Kiaro’s cash-generating assets while providing additional high-margin revenue streams.
The $1.35 million price tag will be sorted out through $850,000 in common shares of Kiaro and $500,000 in cash.
—Joseph Morton