Canadian Manufacturing

HEXO enters into definitive agreement with Tilray Brands to form cannabis alliance

HEXO and Tilray Brands have also committed to work together to evaluate cost saving synergies as well as other production efficiencies to save money.

April 12, 2022   by CM Staff

GATINEAU — HEXO Corp., a cannabis manufacturer, announced that the Company has taken a step forward in executing on its strategic plan by entering into definitive agreements with Tilray Brands, Inc. as well as entering into a definitive equity purchase agreement with an affiliate of KAOS Capital Inc. Closing of the transaction with Tilray Brands and the Standby Agreement is expected to occur by the end of May 2022, subject to the satisfaction or waiver of closing conditions.

The definitive agreements with Tilray Brands solidify the strategic partnership between HEXO and Tilray Brands and, on closing, will provide HEXO with a recapitalized balance sheet and the enhanced financial flexibility critical to accelerating its transformation into a profitable business within the next four quarters.

HEXO and Tilray Brands have also committed to work together to evaluate cost saving synergies as well as other production efficiencies and to set out the terms of such arrangements in certain commercial agreements to be entered into upon the closing of the Transaction. The Commercial Agreements are hoping to create more efficiencies, with a target combined cost savings of up to U.S.$80 million within two years to be shared equally between the two companies.

“Since I arrived, HEXO’s balance sheet has been the biggest impediment to unlocking shareholder value in this tremendous business. This strategic partnership with Tilray both significantly improves our capital structure in the near- and longer-term, but also allows the Company to re-focus on its Path Forward strategic growth plan,” said Scott Cooper, President & CEO of HEXO. “The alliance will lower costs, take advantage of cost synergies and build shareholder value.”

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“We believe that finalizing this agreement not only will significantly improve HEXO’s capital structure but also creates substantial cost and market advantages. It’s an ideal outcome and one we’re exceptionally pleased with,” said Mark Attanasio, Executive Chairman of the Board of Directors of HEXO. “This arrangement with Tilray will place HEXO on a solid path for the future.”