Article by Ottawa Business Journal
Gatineau’s Hexo (TSX:HEXO) is making a major acquisition play in the Ontario cannabis market, announcing Wednesday it intends to acquire Newstrike Brands (TSX-V:HIP) in a multimillion-dollar merger.
The local cannabis company has proposed a $263-million all-stock deal to acquire Toronto-based Newstrike Brands, parent company of pot producer Up Cannabis. The firm’s HIP ticker symbol on the TSX Venture exchange is a reference to the company’s branding partnership with Canadian rockers the Tragically Hip.
The deal would give Hexo capacity to produce roughly 150,000 kilograms of cannabis annually across 1.8 million square feet of growing space and raise the company’s net revenue guidance to more than $400 million in fiscal 2020. The two firms’ combined distribution agreements would cover eight provinces.
“This is the most compelling combination we see in the Canadian cannabis sector,” said Newstrike CEO Jay Wilgar in a statement. “Our strength in Ontario and English Canada clearly complements Hexo’s strong position in Quebec and creates an industry leader.”