Circle K could be selling weed in the near future

This article originally appeared on Cannabis.net and has been republished with permission.

International cannabis venture investor Couche-Tard recently announced plans to increase its stake in Fire & Flower, a cannabis retail giant. As of December 2021, Couche-Tard owned about 20-21% of the Canadian company’s stock, but is aiming to acquire more — up to 35% in the coming weeks.

Couche-Tard, a well-known multinational convenience store operator, was keen to become a top name among cannabis-related investors worldwide. Its resilience can be seen in its rapid acquisition of a sizeable stake in Canada’s largest cannabis retailer.

Photo by OlegMalyshev/Getty Images

RELATED: Cannabis moves closer to Circle K

That announcement suggests Couche-Tard could own as much as 8.2 million shares of Fire & Flower by the end of the second quarter of the year. That intended exchange would take place once Circle K’s convenience stores exercise their warrants.

Information on the Proposed Acquisition

As mentioned, Couche-Tard intends to buy these stocks by exercising their warrants once Fire & Flower’s full-year results are released and released in a few days. Once the acquisition closes, the Quebec-based convenience store giant would have increased its original stake by at least 11%. From 14.5% to 35%. In fact, that’s more than double the existing shares.

Various press releases put the total number of Fire & Flower shares held by the company at 21.5% of the total. They claim that the information was released some time ago thanks to a government request.

Who is Couche-Tard Inc.?

Alimentation Couche-Tard Inc. is a well-known name on the North American convenience and fuel retail scene. The giant company operates in more than 20 countries and territories. With more than 14,000 physical stores in strategic locations worldwide, Couche-Tard Inc. offers approximately 10,800 areas of road fuel.

Alimentation Couche-Tard has an easily recognizable trademark. It is identifiable because it can be found outside of some of the largest independent convenience stores in the US. Its Circle K subsidiary is another popular company in the States.

Photo by Xnatedawgx via Wikimedia

The parent company is one of the leading forces in the convenience store industry and the retail road transport fuel market in Scandinavia, the Baltics, Ireland and Canada. Poland and Hong Kong SAR are two other locations that feel the company’s presence. Today, Alimentation Couche-Tard employs over 120,000 people across its vast network.

fire flower

Fire & Flower is one of Canada’s leading cannabis retailers. The company is one of the first companies to enter Canada’s cannabis-friendly market.

Fire & Flower has a high reputation for using a core, technology-backed operating system. The cannabis retail giant has at least 100 company-owned stores in different country regions. The company often leverages its tech-savvy sister company, Hifyre, to take its retail operations to new heights. This gives an additional independent source of income with a high margin.

Fire & Flower deftly guides its clients through the new, sometimes complex, cannabis ecosystem. This is accomplished through proper retail practices and training materials. At the same time, Hifyre’s digital retail and analytics platform regularly empowers small retailers to optimize their connections with potential, new and existing consumers.

The Canada-based company has an efficient leadership team that strives to combine years of experience from the logistics, retail and technology industries to enhance its cannabis-based business. Brands owned and operated by Fire & Flower’s multi-banner cannabis retail operations include the Friendly Stranger, Happy Dayz and Hotbox brands. Fire & Flower Holdings Corporation legally owns all of its issued and outstanding shares. Some of the Company’s retail operations are located in the provinces of Alberta, British Columbia, Ontario, Saskatchewan, Yukon Territory and Manitoba.

More details on the deal

Alimentation Couche-Tard has successfully positioned itself as a strategic investor in the North American cannabis space. The company plans to expand its operations to other companies and territories, most notably the United States. It plans to use its strategic licensing agreement with Fire & Flower’s US subsidiary to expand into the country. It’s still unclear if the company would stick with it pending incremental changes to state cannabis regulations.

Fire Holdings confirmed that it is aware of Alimentation Couche-Tard Inc.’s intention to acquire over 8 million shares of its common stock.

Photo by Erik Mclean via Pexels

Couche-Tard’s subtle entry into the cannabis market can be traced back to July 2019. At that time, the company announced its mandate to provide Fire & Flower with funds to support its expansion plans. In 2019, the ACT invested an estimated $26 million in Fire & Flower. In return, she received about 9.9% of her total shares. A significant portion of Couche-Tard’s investment has gone into opening more corporate stores for the network. The upcoming investment can also be used for the same purpose.

RELATED: Could Convenience Stores One Day Sell Cannabis?

The Fire & Flower team says it will continue to expand its operational association with the ACT. Once additional funding is received, Fire and Flower’s cannabis retail stores plan to open new stores near existing Circle K stores in relatively new markets in Canada. A few weeks ago, Fire & Flower announced that one of its wholly owned subsidiaries, Open Fields Distribution, just entered into a year-long cannabis distribution agreement with the Manitoba Liquor and Lottery Division. In other words, Open Fields Distribution would begin offering distribution of adult-use cannabis items from registered producers to licensed retailers in Manitoba. In addition, Open Fields also serves areas within and around Saskatchewan.

bottom line

More information will be released as Alimentation Couche-Tard exercises its warrants. The total exercise price for this share purchase will be determined based on the average cost of Fire & Flower shares calculated over a 20-day period.

Under the Series B Warrant, all exercise prices of the Series B Warrants must not exceed $18.75 per share, while the floor price is $4.77.

You can access Fire & Flower’s fourth quarter and full year 2021 financial statements on the company’s website.

This article originally appeared on Cannabis.net and has been republished with permission.