Cannabis producer Hexo buys Rival Redecan Pharm for $ 925 million
Hexo Corp. (TSX: HEXO) buys private cannabis producer Redecan Pharm in $ 925 million transaction.
Hexo will pay $ 400 million in cash and $ 525 million in shares to acquire Redecan. Once the transaction is concluded, the shareholders of Redecan will own 31% of the combined entity and will be authorized to appoint two directors to the board of directors of Hexo.
The transaction is subject to regulatory approvals and a vote by Hexo shareholders to approve the issuance of shares. Hexo said it expects the deal to close in the third quarter of this year.
The deal marks the latest salvo among growers to gain market share in Canada’s hotly contested legal cannabis industry.
Canadian cannabis companies have gone through a period of consolidation over the past six months as an oversupplied market coupled with a highly regulated domestic industry struggling to become profitable has forced some producers to seek growth through mergers and acquisitions. acquisitions.
The acquisition of Redecan follows a similar strategy employed by Hexo in recent months to gain more market share in the crowded cannabis market in Canada, where more than 600 licensed producers can grow or sell legal marijuana.
The Ottawa-based company said it would buy Zenabis Global Inc. (TSX: ZENA) for $ 235 million in February, giving Hexo a presence in the European medical cannabis market. Hexo also announced earlier this month that it would buy 48North Cannabis for $ 50 million.
Including Zenabis and 48North, a merged Hexo-Redecan company would control about 14% of the Canadian recreational cannabis market, according to data from industry consultancy Hifyre. That would be just below the 18% controlled by Tilray (NASDAQ: TLRY) and the 14% share Canopy Growth would have once it closes its deal to buy Supreme Cannabis.
Redecan is among the top sellers of dried flowers, pre-rolls, and vaping products in the legal market. The company made $ 58 million in sales in Canada during the three-month period February through April of this year.