HEXO To Acquire Redecan For C$925 Mln In Cash And Stock – Quick Facts

HEXO Corp (HEXO, HEXO.TO) announced Friday that it has entered into a definitive share purchase agreement to acquire all of the outstanding shares of the entities that carry on the business of Redecan, Canada’s largest privately-owned licensed producer, for a purchase price of $925 million payable in cash and through the issuance of common shares of HEXO and subject to certain customary adjustments.

The consideration includes $400 million in cash and $525 million in HEXO common shares at an implied price per share of $7.53.

Co-founded by Pete Montour, Will Montour and Richard Redekop, Redecan is a family-owned and operated Canadian cannabis company, with agricultural roots stretching back 30 years.

The combined company would hold number one market-share in Canadian recreational cannabis and hold number one positions in four of Canada’s largest markets: Alberta, British Columbia, Quebec and Ontario.

It is anticipated that the Redecan shareholders will collectively hold approximately 31% of HEXO’s issued and outstanding common shares immediately following the closing of the Transaction on a pro forma non-diluted basis. Under TSX rules, the Transaction requires a simple majority approval of HEXO’s shareholders at a meeting expected to be held in August 2021.

HEXO will use substantially all of the net proceeds from the sale of the Notes to satisfy the ?anticipated cash portion of the purchase price in the Transaction.

Redecan shareholders will receive the right to nominate up to two members to HEXO’s board of directors. Upon closing of the Transaction, HEXO’s board of directors will be increased to 10 members, with Peter James Montour and William Montour, two of Redecan’s founding shareholders, joining the HEXO board as directors.

The Transaction, unanimously approved by HEXO’s board of directors, is expected to close in calendar third quarter of 2021. This is subject to the satisfaction of customary closing conditions, including the receipt of applicable regulatory approvals and the shareholder approval described above required under TSX rules.

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