HEXO Corp and Newstrike Brands Ltd. have entered into a definitive arrangement agreement under which HEXO will acquire all of Newstrike’s issued shares in an all-share transaction valued at approximately $263 million.
Under the terms of the Arrangement Agreement, Newstrike shareholders will receive 0.06332 of a HEXO common share in exchange for each Newstrike common share held.
The transaction has been unanimously approved by the board of directors of each of HEXO and Newstrike, and Newstrike’s board of directors recommends that its shareholders vote in favour of the Transaction.
According to the company, the transaction gives HEXO the capacity to produce approximately 150,000 kg of high-quality cannabis annually. The Transaction also provides HEXO access to four cutting-edge production campuses totalling close to 1.8 million sq. ft. of near-term cultivation space and diversified growing and production techniques. This is in addition to HEXO’s 579,000 sq. ft. facility for a manufacturing and product development centre of excellence in Belleville, Ontario.
The company points out that combined, HEXO and Newstrike have established distribution agreements in 8 provinces including Ontario, Quebec, British Columbia, Alberta, Saskatchewan, Manitoba, Nova Scotia, and Prince Edward Island.
Further, the company highlights that Newstrike’s licensed indoor facility provide HEXO with access to diversified growing techniques and positions HEXO for flexibility for international exports as global cannabis markets continue to open.