Hexo Corp (TSX: HEXO) (NYSE: HEXO) this morning announced that it will be purchasing a yet another Canadian licensed producer, marking the third such announcement this year by the firm. The company has formally entered into a definitive agreement to acquire Redecan, the largest private cannabis operator in Canada.
The transaction, which follows the news last night that the company had issued US$360 million in senior secured convertible notes, is pegged at $925 million in aggregate. The transaction is to consist of both cash and common shares, and is expected to result in the company holding the number one market share position in Canadian recreational cannabis, and the largest position overall in four of the largest Canadian markets.
Under the terms of the transaction, Redecan is to be acquired for $400 million in cash, as well as $525 million in common shares of the issuers. Shares are to be issued at a price of $7.53 per common share. It’s expected that Redecan shareholders will hold 31% of the combined entity on a pro-forma basis. Redecan will also be able to nominate two directors to the firms board, with Peter James Montour and William Montour to join the board upon closing of the transaction.
The transaction is currently slated to close in the third quarter of 2021.
Hexo Corp last traded at $7.90 on the TSX.
Information for this briefing was found via Sedar and Hexo Corp. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.