The Financial Post reports in its Thursday, March 14, edition that Hexo is acquiring Newstrike Brands in an all-stock deal worth $260-million.
The Post's Vanmala Subramaniam writes that the deal is the biggest yet to take place between two sizable Canadian cannabis companies postlegalization in a crowded industry in which the top two players -- Aurora Cannabis and Canopy Growth -- control just under 50 per cent of domestic recreational cannabis sales.
Newstrike shareholders will receive 0.06332 of a Hexo common share in exchange for each Newstrike common share held.
Hexo currently has a market value of almost $1.6-billion. The acquisition of Newstrike will increase Hexo's distribution footprint from three to eight provinces, and potentially propel it to become one of the top four biggest cannabis companies in Canada, after Canopy, Aurora, Aphria and Tilray.
Hexo boss Sebastien St. Louis says, "We're adding $55-million in cash to Hexo with this acquisition, and this is in line with our vision to be in the Top Three cannabis companies worldwide." Mr.
St. Louis says the deal will boost Hexo's capacity to about 150,000 kilograms of cannabis annually, on a total cultivation space of 1.8 million square feet.
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