Vancouver-based TAAT Global Alternatives, a manufacturer of hemp-based cigarettes, recently announced it would acquire HLND Holdings, Inc., the parent entity of a convenience and tobacco wholesaler based in Ohio.
This follows an October announcement that the company received $8 million from a group of private investors led by Debbie Chang. Chang is the co-founder of Horizons Ventures, which serves as the venture capital arm of billionaire Hong Kong business magnate Li Ka-shing.
HLND presently maintains a network of more than 5,000 convenience stores through its direct and indirect relationships with independent and corporate retailers as well as a network of regional sub-distributors. According to a news release, from 2019 to 2021, HLND realized at least 10% growth of its net revenues each year, with net revenues for calendar 2021 amounting to CAD $87M and continues to be profitable.
“This gives us access to a route-to-market. It also gives us access to a midwest hub, which we need,” said Setti Coscarella, CEO and director of TAAT. He anticipates that this acquisition should fortify its existing revenue sources as well as its portfolio of assets as TAAT continues to expand both in the United States and internationally.
“It also gives us access to testing new marketing initiatives and products as we are looking to expand. We are focused on hemp cigarettes for now, but eventually we want to be a type of Coca-Cola with a range of different products,” Coscarella said of how this acquisition fits into TAAT’s expansion plans for the future.
Coscarella further explained the key benefits the acquisition brings to TAAT. “I think this acquisition does a number of key things for us: it adds a tremendous amount of revenue. Before, we were trading at 50 or 60 times revenue, now we are at 1.5x revenue, which I think is much better,” he said.
“It also gives us the ability to develop products and test them quickly. It gives us insights into other products that might be working in the market, especially new ones, since that factory will have access to it and can track it. That way, we can quickly develop, launch our own, and scale out,” Coscarella said.
With its agreement to acquire HLND, TAAT “is embarking on a journey in which it plans to convert certain aspects of its supply chain into wholly-owned internal business units, which aligns with the practices of current leaders in the global tobacco industry,” Coscarella said. He thinks that with HLND’s seasoned executive team and personnel in sales, logistics, and product development, TAAT can leverage these skill sets as part of commercializing TAAT products on a larger scale.
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