The important thing is not the fall, it’s the landing. And it would appear to be a tough one for Hexo, which its founders outlined in a book tracing its history as a “billion-dollar start-up.”
Hexo Corp revealed last night that it would be acquired by cannabis producer Tilray in an all-stock deal for US$56 million (€51.4 million).
Hexo shareholders will receive 0.4352 shares of Tilray for each Hexo share currently held, which equates to a price of $1.62 per share at the April 10 market close.
Hexo meanwhile closed the day at $2.23 after surging 30% on the day, with the sale representing a loss to shareholders based on the current share price. The price paid would represent a price of $1.25 per share, based on Hexo’s 60-day volume-weighted average price on the Nasdaq, a vindication shareholders will surely appreciate.
The transaction is said to “strengthen the successful strategic alliance between the two companies and position Tilray for continued strong growth and market leadership in Canada.”
“When we began working with Tilray last year, the value that could be achieved by combining our businesses to compete and drive profitable growth in the highly fragmented Canadian market was immediately apparent. Given the recent headwinds in the cannabis industry, our Board of Directors determined that HEXO shareholders would benefit from having a stake in Tilray’s diversified businesses and the strong plan in place to strengthen their leadership in the industry. industry, continue to strengthen results and drive value creation,” commented Mark Attanasio, Chairman of Hexo’s Board of Directors.
Over the past year, Hexo’s management had developed and implemented a turnaround and cost reduction plan.
The sale of Hexo to Tilray comes after the two companies announced a strategic partnership last year that will include collaboration in distribution and packaging to improve operational efficiency and generate savings.
The agreement also gave Tilray the option of acquiring a stake in Hexo.