Planet 13 enters agreement to acquire VidaCann for $48.9M

Planet 13 Holdings has entered into a membership interest purchase agreement dated August 28, 2023 to acquire all of the ownership interests of VidaCann from the sellers who currently own all of the membership interests in VidaCann. VidaCann is engaged in the business of cultivating, processing, storing, transporting, and dispensing cannabis as well as leasing and operating cannabis cultivation, processing, fulfillment and storage, and dispensing facilities in the State of Florida. VidaCann currently operates 26 dispensaries and is the 9th largest dispensary network in Florida. With Planet 13’s three dispensary locations in Nevada and California, upcoming Illinois dispensary, four leased dispensary locations in Florida, and proven SuperStore and experiential retail expertise, the proposed acquisition has the potential to enhance both absolute and per-store revenue generation. Pursuant to the Purchase Agreement, the Company will acquire VidaCann from the Sellers for agreed consideration equal to the sum of: 78,461,538 common shares in the capital of the Company; a cash payment of $4,000,000; and promissory notes to be issued by the Company to the Sellers in the aggregate principal amount of $5,000,000, with each of the above components subject to adjustments as set out in the Purchase Agreement. Based on the closing price of the Company’s common shares of $0.5071 as of August 25, 2023 on the Canadian Securities Exchange, the total consideration is valued at approximately $48.9 million. The Purchase Agreement contemplates that VidaCann will continue to have $3,000,000 of bank indebtedness and $1,500,000 or less of related party notes to former VidaCann owners at the time of closing. Pursuant to the Purchase Agreement, 1,307,698 shares comprising the Base Share Consideration will be issued to VidaCann’s industry advisor, 9496 7346 Quebec on closing. The proposed transaction is an arm’s length transaction. Post-transaction, the former equityholders of VidaCann, along with the VC Advisor, will have approximately 26.09% pro forma ownership in Planet 13 on a fully diluted basis, before factoring in any adjustments to the Base Share Consideration. All shares issued by the Company will be subject to resale restrictions under applicable U.S. and Canadian securities laws. Furthermore, each Seller and each equityholder of a Seller that holds over 5% in direct or indirect interest in VidaCann and receives Base Share Consideration will be subject to a lock-up agreement restricting trading of the shares received, with the release of one-third of shares from such restrictions six months following closing and each subsequent six months thereafter. The proposed transaction is expected to close in, or immediately prior to, the first quarter of 2024, subject to customary closing conditions, including the receipt of approval from the applicable state cannabis regulators and the sale of the Company’s Medical marijuana Treatment Center license in Florida to a third party, including any regulatory approvals required to effectuate the sale. The Sellers will be granted the right on closing to nominate one additional, director to the board of directors of Planet 13. The proposed transaction has been unanimously approved by the Board of Planet 13 and the managers of VidaCann.