International cannabis company IM Cannabis Corp. (NASDAQ: IMCC) entered into a deal to buy MYM Nutraceuticals Inc. and its licensed producer subsidiary Highland Grow Inc. in a deal that is said to be immediately accretive. The acquisition reinforces IMC’s strategy as a leading global premium cannabis producer and purveyor. Following completion of the Transaction, expected to occur before the end of the second half of 2021, IMC will continue to operate under the IM Cannabis Corp. name with its common shares trading on the NASDAQ Capital Market and Canadian Securities Exchange under the ticker symbol “IMCC“.
“Acquiring MYM is consistent with IMC’s focus on premium and super-premium segments of the cannabis market for consumers and patients in all markets. The Transaction also demonstrates our disciplined approach to acquiring accretive companies that create financial and operational synergies and result in additional opportunities to export premium cannabis products to Israel and Germany,” said Oren Shuster, CEO, IMC. “With coast-to-coast distribution, including a strong leadership position in Eastern Canada, Highland Grow will further enhance our distribution capabilities and fast-track our entrance into new markets.
The acquisition is expected to be immediately accretive to IMC’s financial results in 2021 and beyond. Highland Grow is expected to generate net revenue of $29 million and $38 million and gross margins of 34% to 36% in 2021 and 2022, respectively. Inclusive of potential synergies, it is estimated that the acquisition of Highland Grow implies a purchase multiple of approximately 3.4x EV/revenue and 10.6x EV/EBITDA for 2021 and 2.3x EV/revenue and 6.7x EV/EBITDA for 2022.
IM Cannabis said in a statement that buying MYM and its subsidiary Highland Grow will expand its focus on premium and super-premium branded cannabis products in Canada. With coast-to-coast distribution, including a strong leadership position in eastern Canada, Highland Grow enhances IMC’s distribution capabilities, fast tracks the entrance of JWC (expected soon to be relaunched as “Wagners“) into new markets, and is expected to drive significant incremental revenue and EBITDA growth. With the demand for premium-indoor grown cannabis increasing internationally, IMC’s medical patients in Israel will now have even more options from which to choose. Highland Grow has experienced meaningful revenue growth over the last six months, is currently profitable on an EBITDA basis, and is expected to be a meaningful contributor to IMC’s revenue and profitability trajectory in 2021 and beyond.