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HEXO Corp (TSX:HEXO) (NASDAQ:HEXO) reported Wednesday that its shareholders approved the previously announced acquisition of family-owned Canadian cannabis producer Redecan.
In exchange, the Ottawa-based company agreed to pay $400 million in cash in addition to the issuance of 69,721,116 common shares at $7.53 per share, bringing the total consideration to $925 million.
The transaction resolution was approved by 96.183% of the votes cast by shareholders at its meeting.
According to HEXO, the acquisition is poised to advance its offering with various products across many categories, including top-selling oils and capsules and pre-rolls. In addition, it will enable Hexo to quickly reach positive earnings per share, as Redecan already had consistent "significant EBITDA" results with no debt, the company reported in May.
Cantor Fitzgerald's Pablo Zuanic has said he believes that this purchase, in addition to the $235 million acquisition of Zenabis Global Inc. (TSX:ZENA), will position HEXO as "the largest Canadian cannabis seller."
Even though the company's stock price plunged last week by 28% on announcing overnight marketed public offering of its 47.46 million units at $2.95 per unit, for total proceeds of $140 million, Zuanic expects "a recovery in company sales as stores reopen post-COVID-related shutdowns (to in-store traffic), and as the boards start to rebuild inventories."
The stock is trading 1.17% higher at $2.59 per share in the pre-market session on Thursday morning following the announced debut on the Nasdaq Capital Market on Tuesday.
Simultaneously, the company shareholders voted in favor of the ordinary resolution to approve the issuance of more than 32,198,894 common shares pursuant to the senior secured convertible note dated May 27, 2021, in the principal amount of $36 million and due May 1, 2023.
In addition, HEXO appointed Guillaume Jouët, who brings over two decades of experience as a senior international executive leading human resources, sustainability, public affairs and communications, as its new chief people and culture officer. The decision is effective September 8.
"We are looking forward to welcoming Guillaume to the team as we continue to expand rapidly in Canada, into the U.S., and globally," Sebastien St-Louis, CEO and co-founder of HEXO, disclosed. "At HEXO, we believe that people are one of our most valuable assets."
Photo: Courtesy of Ryan Lange on Unsplash
