Tilray Brands, Inc. (TSX: TLRY) (NASDAQ: TLRY) closed the acquisition of HEXO Corp. (TSX: HEXO) (NASDAQ: HEXO) previously announced in April and is now Canada’s largest cannabis company by revenue.
The company announced completion of the transaction on Friday and HEXO is expected to delist from the TSX and Nasdaq exchange in the immediate future.
Tilray now holds 100 per cent of HEXO’s shares and says it is Canada’s top flower producer, second-largest distributor of pre-rolls and sitting within the top 10 listing for all other cannabis categories in the country.
Tilray expects that pre-roll sales will eventually become its number one revenue generator because of the advanced production infrastructure it has acquired from HEXO, surpassing revenue generated from flower in the long term.
Through the deal, the company has added HEXO brands to its portfolio such as Redecan, Original Stash and Bake Sale. The acquisition is expected to accelerate the realization of operating and cost synergies for Tilray by over $35.6 million.
With $HEXO, $TLRY amplifies its market-leading offering and substantially expands its base of consumers and patients with a portfolio consisting of the highest growth consumer and medical brands in the Canadian cannabis market across the premium, mainstream, and value segments. pic.twitter.com/QUg8z198BI
— Tilray Brands (@tilray) June 23, 2023
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Tilray Canada’s President Blair MacNeil says the company is relentlessly focused on growing its market share and succeeding in Canada.
“Taken together, we intend to capitalize on the commercial and financial benefits that are inherent in combining HEXO with Tilray. These include accelerating the optimization of our operations, sales and marketing efforts that are already underway,” said MacNeil.
Tilray’s Chairman and CEO Irwin D. Simon says the transaction will create significant value for shareholders.
“Acquiring HEXO boosts Tilray’s competitive positioning in the largest, federally legalized cannabis market in the world and we believe, marks the next evolution of Canadian cannabis,” said Simon.
In addition to Tilray’s strengthened market presence in Canada, the company has a global footprint and recently received authorization from Italy’s Ministry of Health to distribute a series of medical cannabis compounds in the European nation.
Tilray’s subsidiary Solei Canada launched a line of cannabinoid-infused tea last month and the company reported $1.1 billion in losses for the fiscal quarter ending February 28 because of higher interests and a decline in market capitalization.
Despite the losses, the company had $408.3 million in cash and marketable securities at the end of that quarter.
Tilray shares dropped by 6.13 per cent Friday to $1.99 on the Toronto Stock Exchange.
rowan@mugglehead.com
