The deal will boost HEXO's cannabis production capacity to close to 150,000 kg annually on a total cultivation space of 1.8 million square feet.
Retail investors, who continue to make up a sizable proportion of cannabis company shareholders, lamented the low premium attached to the Emblem deal and are doing the same for this latest proposed transaction. The company offers dried cannabis under the Time of Day and H2 lines; Elixir, a cannabis oil sublingual mist product line; and Decarb, an activated fine-milled cannabis powder product.
Combined, HEXO and Newstrike have distribution agreements in eight provinces. The company expects to achieve net revenues from Canadian cannabis sales of $400 million for fiscal 2020.
"Following a thorough assessment of security providers, we are satisfied that the world-class security services provided by Thomas and his expert team at 3 Sixty are the best choice to ensure the safety of our facilities and products", said Jay Wilgar, CEO of both Newstrike and Up Cannabis. The company expects $10 million in annual savings on the production and administrative side as a result of the merger, which remains subject to approvals from courts and regulators as well as Newstrike shareholders.
A local cannabis producer is taking over the Toronto parent company of another pot producer. "Our strength in Ontario and English Canada clearly complements Hexo's strong position in Quebec and creates an industry leader".
Bondar said the collaboration between Spiritleaf and Newstrike will continue with its original plan to place the Up Cannabis brand in a prominent spot for the Kingston store, set to open on April 1. They issued an "underperform" rating on the stock.
Newstrike now has two cannabis facilities in Ontario - an indoor grow room in Brantford, and a greenhouse in Niagara. Last year, Aurora Cannabis Inc. acquired rivals MedReleaf Corp. and CanniMed.
"Upon completion of the Transaction, existing HEXO and Newstrike shareholders would own approximately 86 [percent] and 14 [percent] of the pro forma company, respectively, on a fully diluted basis", Hexo indicated. As the company grows both organically and through acquisitions, he says the firm remains proud of its local roots.
"We have been extremely impressed with the cadence and quality of agreements that Up Cannabis has announced", said Thomas Gerstenecker, CEO and Founder of 3 Sixty.
St-Louis said on Thursday he expected Hexo's sales to be relatively flat during its third quarter which ends April 30, but a new facility the Quebec-based licensed producer is building in Belleville, Ont. will be "transformational". HEXO Corp. (NYSE:HEXO) has diverse figures for different time frames; starting from week's performance it presents bullish trend of 8.97% in last five regular trading sessions.