Tilray To Buy Hemp Food Company Manitoba Harvest For $317M

Cannabis company Tilray Inc. TLRY will expand its operations into the United States and Canada hemp industry through the acquisition of FHF Holdings Ltd., also known as Manitoba Harvest, from Compass Diversified Holdings CODI and other shareholders.

The Details

Tilray will pay up to C$419 million ($317.53 million) for Manitoba Harvest in both cash and class 2 common stock. The value of the transaction will depend on the achievement of certain milestones after the sale is closed.

At closing, Tilray will pay C$277.5 million, which will include C$150 million in cash and the rest in stock. Six months after closing, Tilray will pay C$92.5 million, including C$50 million in cash. An additional C$49 in Tilray stock will be issued based on Manitoba achieving certain performance milestones this year and this amount can be reduced if the milestones are not achieved.

The Company

Manitoba Harvest is the largest manufacturer of hemp food that has a portfolio of products sold in over 16,000 stores in the U.S. and Canada. It's also working on launching a line of CBD products containing Broad Spectrum Hemp Extracts and hemp wellness bars later this year.

The acquisition will allow Tilray to expand its portfolio and enter the natural foods category and take advantage of Manitoba's expertise in working with cannabinoids, including CBD. Moreover, Tilray will be able to leverage Manitoba's distribution network and sell its own CBD products.

The acquisition is expected to close in 30 days. Manitoba Harvest will operate as a wholly-owned subsidiary of Tilray, but will be able to benefit from Tilray's team of cannabis industry experts and strategic partners. Both companies will also work together to develop new CBD wellness products and hemp-based consumer food products.

Tilray shares traded up about 1.2 percent at to $78 Wednesday morning.

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