CPG Cannabis Co. Hexo Corp To Buy 48North Cannabis Corp. For $50M In Stock
Under the agreement, 48North shareholders will obtain 0.02366 of a Hexo common share for each 48North share.
The deal has been unanimously approved by both Hexo and 48North’s board of directors. To be finalized the transaction still requires the approval of 48North’s shareholders and other standard regulatory, court and stock exchange approvals.
Upon completion of the transaction, current shareholders of Hexo and 48North would own around 96% and 4% of Hexo on a pro forma non-diluted basis, respectively.
Under the deal, Hexo will grant 48North a $5 million subordinated secured bridge loan with a 6-month term to support 48North’s short-term working capital demands.
Why It Matters: Key Benefits From The Acquisition
The deal is meant to provide several important advances to Hexo, including:
- Improving the company’s position in the Canadian recreational market – in combination with previously announced acquisition of Zenabis Global Inc. (TSX: ZENA), the combined company should be among the top producers based on combined Canadian adult-use sales;
- Diversifying its product portfolio;
- Brining accretive synergies – potentially of up to $12 million annually within one year of closing the deal.
“As we continue down our path towards achieving a top two position in Canada by adult-use sales, we are looking forward to welcoming the 48North team into the HEXO family.” Sebastien St-Louis, CEO and co-founder of HEXO Corp stated. “48North’s innovative product portfolio complements HEXO’s existing brands which, combined with their additional market penetration, will further strengthen HEXO’s position in the Canadian market. “
Hexo’s shares were trading 3.94% higher at $6.07 per share at the time of writing.
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