Tilray acquires Hexo for $56 million

It's not the fall that's important, it's the landing. And it would appear to be a hard one for Hexo, which its founders have described in a book tracing its history as a «billion-dollar start-up».

Last night, Hexo Corp revealed that it would be acquired by cannabis producer Tilray in an all-share transaction, for US$56 million (€51.4 million).

Hexo shareholders will receive 0.4352 Tilray shares for each Hexo share currently held, equivalent to a price of 1.62$ per share at the close of the market on April 10.

Hexo, meanwhile, closed the day at $2.23, having jumped 30% on the day, the sale representing a loss for shareholders based on the current share price. The price paid would represent USD 1.25 per share, based on Hexo's 60-day volume-weighted average price on the Nasdaq, a justification that shareholders will certainly appreciate.

The transaction is expected to «reinforce 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 a stake in Tilray's diversified business and the solid plan in place to reinforce their industry leadership, continue to strengthen results and drive value creation,» commented Mark Attanasio, Hexo's Chairman of the Board.

Over the past year, the management of’Hexo had drawn up and implemented a turnaround plan. and cost reduction.

The sale of Hexo to Tilray comes after both companies last year announced a strategic partnership enabling, among other things, collaboration in distribution and packaging to improve operational efficiency and generate savings.

The agreement also gave Tilray the opportunity to acquire a stake in Hexo.