Tilray Brands, a cannabis company, announced a partnership with HEXO Corp. – a deal that would bring together Canada’s top two cannabis market share leaders.
Under the deal, Tilray Brands would acquire up to US$211 million of senior secured convertible notes that were issued by HEXO and are currently held by funds affiliated with HT Investments MA. The notes would be amended to permit Tilray Brands to exercise conversion rights for C$0.90 per HEXO Share and acquire a significant equity ownership position in HEXO.
The deal is designed to strengthen their respective positions and increase production efficiencies.
“We believe this proposed transaction would be a win-win for Tilray Brands and HEXO as it would launch a strategic partnership between two leading Canadian cannabis producers with complementary brand portfolios. For us, it provides a path for meaningful future equity ownership of HEXO and enables us to participate in HEXO’s share price appreciation as it continues to execute on its growth initiatives,” Tilray Brands Chairman and CEO Irwin Simon said.
The strategic alliance between Tilray Brands and HEXO would provide several financial and strategic benefits.
The proposed alliance is further expected to deliver up to C$50 million of cost synergies, to be shared equally within two years of the completion of the transaction. Also, both companies would share their respective expertise to strengthen market positioning and capitalize on opportunities for growth through a broadened product offering.