Tara Deschamps
Cannabis plants are seen during a tour of a Hexo Corp. production facility, Thursday, October 11, 2018 in Masson Angers, Que. Hexo Corp. says it will buy 48North Cannabis Corp in a deal valued at $50 million. THE CANADIAN PRESS/Adrian Wyld May 17, 2021 - 7:36 AM
Hexo Corp. will try to boost its market share with a $50-million deal to buy 48North Cannabis Corp.
Ottawa-based Hexo said Monday that purchasing Toronto-based 48North will bring the company closer to its goal of achieving a top two position in Canada for adult-use cannabis sales. 48Northâs innovative product portfolio complements Hexo s existing brands which, combined with their additional market penetration, will further strengthen Hexoâs position in the Canadian market, Sebastien St-Louis, Hexo s chief executive and co-founder, said in a release.
CPG Cannabis Co. Hexo Corp To Buy 48North Cannabis Corp. For $50M In Stock
What Happened
Under the agreement, 48North shareholders will obtain 0.02366 of a Hexo common share for each 48North share.
The deal has been unanimously approved by both Hexo and 48North’s board of directors. To be finalized the transaction still requires the approval of 48North’s shareholders and other standard regulatory, court and stock exchange approvals.
Upon completion of the transaction, current shareholders of Hexo and 48North would own around 96% and 4% of Hexo on a pro forma non-diluted basis, respectively.
Under the deal, Hexo will grant 48North a $5 million subordinated secured bridge loan with a 6-month term to support 48North’s short-term working capital demands.
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“48North’s innovative product portfolio complements HEXO’s existing brands which, combined with their additional market penetration, will further strengthen HEXO’s position in the Canadian market,” Sebastien St-Louis, CEO and co-founder of HEXO, says in the statement.
Assuming completion of both the 48North and Zenabis Global Inc. transactions, “the combined organization would be among the leading licensed producers in terms of combined Canadian recreational sales, based on their most recent financial statements and results,” HEXO reports.
The move to absorb 48North and its topicals, bath and intimacy products helps to diversify HEXO’s existing adult-use cannabis portfolio, thereby providing “a strong base for potential future CPB partnerships in the U.S., Canada and internationally.”
Canada's main stock index rose on Monday, lifted by material stocks that gained on rise in gold prices as lower U.S. Treasury yields and inflation worries made bullion more attractive.
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