After snapping up 48North and Zenabis earlier this year, Quebec-based HEXO announced on Friday that it’s making its third acquisition of 2021: Ontario-based Redecan, for a cool $925 million.
Battle of the brands
It’s all part of HEXO’s M&A focused strategy to become one of the top three cannabis companies in Canada, reported the Globe and Mail. According to Headset, Redecan is in third place for adult-use sales and its pre-rolled products — like the slim, popular Redees pre-rolls — are in first place in Ontario and BC.
“The brand is phenomenal,” said HEXO CEO Sebastien St-Louis in the Globe story. “It has the number one loyalty in Canada and we believe it is one of the most profitable licensed producers in Canada.”
By the numbers
HEXO took out a US$360 million loan to fund the $400 million cash portion of the deal. The remaining $525 million will be paid out in shares for $7.53/share.
“Joining the HEXO team will leverage our combined strengths and accelerate our growth within Canada and internationally,” said Redecan co-founder Pete Montour in a statement. “We look forward to building a leading global organization together.”
Unlike some of its Canadian competitors, St-Sebastien said HEXO’s plans for the US will not include acquisitions of American companies.
“We’re going to be a products company,” he said. “The idea with these acquisitions is to build a winning portfolio and take that portfolio into the U.S. when we can.”