Canadian firm High Tide acquires UK’s Blessed CBD at 4x EBITDA valuation

Canadian retail-focused cannabis business High Tide has marked its entry into the UK’s booming CBD market with the acquisition of leading firm Blessed CBD. The deal will initially see High Tide acquire 80 per cent of Enigmaa Ltd (which trades as Blessed CBD) for £9.06 million, with the company having a three-year option enabling it to acquire the remaining 20 per cent at any point.

The initial consideration will be comprised of £4.9 million in common High Tide shares and £4.2 million in cash. The deal implies an overall valuation of Blessed CBD of £11.3 million, a 4x multiple of the company’s EBITDA of £2.8 million (on £5.1m revenue) for the year ending August 2021. The deal is expected to close this month.

The acquisition comes as one of the most significant deals in the UK’s rapidly-growing CBD sector, which is seeing particularly strong interest from well-capitalised overseas firms with existing operations in more developed cannabis markets, such as the USA and Canada. For UK CBD startups, acquisitions by such large firms allow them to tap into greater scale and resources and enable expansion into new product lines and markets.

Founded in 2019, Scotland-headquartered Blessed has rapidly become one of the UK’s most popular CBD brands, generating close to 5 million site visits last year, with an average order value of around £75. The company operates a 100 per cent direct-to-consumer e-commerce operation and sells numerous products manufactured by contract exclusively for Blessed CBD.

Products sold by the company include CBD-based oils, cream, capsules and gummies. Since Blessed’s inception in 2019, it has fulfilled more than 120,000 orders for around 87,000 customers.

High Tide’s President and CEO Raj Grover said: “I’m very pleased to announce the addition of Blessed CBD, the U.K.’s top CBD brand as designated by several prominent publications, into the High Tide family.”

“We continue to increase our online prowess by adding asset-light businesses to our growing global e-commerce portfolio. Blessed is a fully direct-to-consumer platform that generates industry-leading gross margins as well as EBITDA margins that will continue to add to our consolidated margin profile.”

Mr Grover added: “This acquisition marks our entry into the highly lucrative and rapidly-growing U.K. CBD space which we expect to serve as a launching pad for High Tide to further penetrate the E.U. market for hemp-derived CBD products, while also taking advantage of cross-selling opportunities related to our in-house product lines.”

“I have been very impressed with the amazing business that V (Blessed CBD Founder and CEO Vithurs Thiru) has been able to build within just two years, and look forward to welcoming him and the rest of the Blessed team into our company.”

Post-acquisition, Blessed CBD Founder and CEO Vithurs Thiru will join High Tide as the firm’s Senior Manager of Search (SEO) as it targets further international growth. Mr Thiru commented: “Blessed CBD has experienced rapid growth and success from inception, and our goal is to become the most sought-after CBD brand globally. Our team is super excited to be joining hands with Raj, and by leveraging High Tide's existing resources and reach, I couldn't be more excited about the future.”

“I look forward to working with Raj and his team to accelerate the digital presence of High Tide's brands, and to position High Tide as one of the leading vertically-integrated cannabis companies in the industry. This acquisition provides unparalleled opportunities for growth to serve our current and future customers, expand into emerging new markets, and introduce new products unmatched in quality.”

The deal comes amid a period of rapid growth for the CBD market, both in the UK and worldwide. Globally, the market’s size surpassed $7.1 billion (£5.2 billion) last year and is forecast to achieve a compound annual growth rate of more than 35 per cent between 2021-2027, with predictions that it could accelerate to around $23.6 billion (£17.3 billion) over the next five years.

The UK is among the world’s most active CBD markets and a key driver of this growth. The UK’s CBD market, which has been described as having one of the most evolved regulatory frameworks in the world, is forecast to generate £690 million in sales this year.


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