Hexo to purchase Redecan for $925M, increasing cannabis market share
The U.S. has been edging towards national legalization for months and is exploring a series of regulatory changes that would make it easier for cannabis companies to bank and operate in the U.S.
Hexo Corp. will buy cannabis producer Redecan in a $925-million deal as the pot company continues its hunt for market share.
Ottawa-based Hexo said on May 28 that it will pay $400 million in cash and $525 million in Hexo shares valued at $7.53 per share.
The deal for Toronto-based Redecan, which is privately held, will increase Hexo’s share in the competitive cannabis market and build on its long-standing plan to become a top three cannabis player in the Canadian adult-use market
“With today’s announcement, we believe that we are on the verge of surpassing that objective to become the no.1 licensed producer by recreational market share,” Sebastien St-Louis, Hexo’s chief executive and co-founder, said in a release.
The company now says Redecan will make Hexo the volume leader in dried flower across premium, mainstream and value price points and give it the No. 1 position in Alberta, B.C., Quebec and Ontario.
It will also introduce Redecan’s oils, capsules, pre-rolls and vapes to Hexo’s growing portfolio of vapes, flowers, edibles and expanding line of cannabis beverages it produces with Molson Coors Canada under the Truss Beverage Co. banner.
Hexo has been intensifying its efforts to introduce more consumer packaged goods categories to its portfolio and increase its hold on the market.
The company announced earlier this month that it would also purchase 48North Cannabis Corp. for $50 million, handing the company a cosmetics foothold with body oils and creams, bath salts and even intimacy oils.
In February, it said it would spend $235 million to buy Zenabis Global Inc. and its Namaste, Re-Up, Blazery and Founders Reserve brands.
The deals are meant to fortify Hexo’s portfolio, so it’s ready to compete in the event that the U.S. federally legalizes cannabis.
The U.S. has been edging towards national legalization for months and is exploring a series of regulatory changes that would make it easier for cannabis companies to bank and operate in the U.S.
In anticipation of such moves, Tilray Inc. and Aphria Inc. merged, Canopy Growth Corp. snatched up Supreme Cannabis and Ace Valley Cannabis and Sundial Growers Inc. said it will buy Inner Spirit Holdings Ltd.
The deal announcement caused Hexo’s stock to surge nearly 15 per cent or $1.14 in mid-morning trading, reaching $9.04 per share.
