Supreme Cannabis acquisition of BlissCo gets thumbs up at PI

The Supreme Cannabis Company’s (The Supreme Cannabis Company TSX:FIRE) latest acquisition is getting the nod from PI Financial analyst Jason Zandberg.

On Thursday, FIRE announced it had entered into a definitive agreement to acquire Vancouver-based BlissCo Cannabis Corp. for approximately $48-million.

“Blissco has built a distinct and authentic premium wellness brand. Through our strategic partnership and prior investment in the company, we developed a deep understanding of the business and a high level of confidence in the senior management team. This transaction will allow Blissco to focus its business around the production and commercialization of cannabis oils and topicals for the premium wellness consumer,” said Navdeep Dhaliwal, CEO of Supreme Cannabis. “Blissco shares our vision, mission and values. Through this transaction, we will combine best-in-class processes, commercialization, marketing and brand building expertise, and skilled management, ensuring we continue to achieve our vision to improve global well-being with cannabis.”

Zandberg says he will hold off on incorporating the acquisition into his model, but says he approves of the transaction.

“We believe that the BlissCo acquisition was relatively inexpensive and allows Supreme to control its future production capabilities,” the analyst says. “At this time we are not revising our forecasts until this acquisition closes which is expected to be in mid-July.”

In a research update to clients today, Zandberg maintained his “Buy” rating and twelve-month target of $4.50 on Supreme Cannabis.

Zandberg thinks FIRE will post EBITDA of negative $6.0-million on revenue of $37.5-million in fiscal 2019. He expects those numbers will improve to EBITDA of positive $33.9-million on a topline of $116.2-million the following year.

“This transaction will provide FIRE with extraction capabilities which are necessary for producing future products once the Canadian cannabis market introduces new product formats including concentrates and vape pens,” the analyst adds.

Supreme Cannabis Corporate Profile via PI Financial:

“The Supreme Cannabis Company owns and operates 7ACRES which is a license cultivator and seller of medical cannabis in Canada. Supreme grows cannabis in a hybrid greenhouse located in Kincardine, ON.”