Alimentation Couche-Tard Inc. announced that it will make a strategic investment in Fire & Flower Holdings Corp., an independent cannabis retailer based in Canada.

Fire & Flower currently operates or licenses 23 cannabis retail stores in Alberta, Saskatchewan and Ontario, a wholesale distribution division in Saskatchewan, and the leading HiFyre digital retail platform designed to connect consumers to the world of cannabis.

This investment will provide Fire & Flower with additional capital to further accelerate their expansion strategy. Through their strong leadership team with years of balanced experience in the cannabis and retail sectors, Fire & Flower has demonstrated their capability of rapidly scaling their retail network through a best-in-class store concept, their proprietary HiFyreTM platform, and a focus on the safe, responsible and lawful sale of cannabis.

Transaction Highlights

• Couche-Tard will invest $25,989,985.42 in the form of unsecured convertible debentures (the “Debentures”) to obtain a 9.9% ownership interest in Fire & Flower upon conversion;
• Couche-Tard will concurrently receive three series of share purchase warrants, which, if exercised in full, would subsequently increase Couche-Tard’s ownership interest to 50.1% on a fully diluted basis (assuming the conversion in full of the Debentures);
• At closing, Couche-Tard will immediately be granted nomination rights to the board of Fire & Flower, which will escalate commensurate with the exercise of the warrants and the increase in Couche-Tard’s ownership position; and
• In connection with the Transaction, Couche-Tard will also be granted participation and top-up rights in order to maintain its equity ownership percentage going forward as well as certain customary registration rights.

“Couche-Tard is excited to make this strategic investment in one of the fastest growing cannabis ‘pure-play’ retailers,” said Brian Hannasch, president and CEO of Couche-Tard. “This investment in Fire & Flower, with a path to a controlling stake, will enable us to leverage their leadership, network and advanced digital platform to accelerate our journey in this new and flourishing sector.”

The Transaction is subject to customary closing conditions and applicable regulatory approvals, including Fire & Flower shareholder approval.

Laval, Quebec-based Couche-Tard is the leader in the Canadian convenience store industry. As of April 28, Couche-Tard’s network in North America comprised 9,866 convenience stores, including 8,629 stores with fuel. Its North American network consists of 19 business units, including 15 in the U.S. covering 48 states and four in Canada covering all 10 provinces. In addition, through CrossAmerica Partners LP, Couche-Tard supplies road transportation fuel under various brands to approximately 1,300 locations in the U.S.