Tilray Brands will acquire its rival HEXO Corp for US$56 million through the issuance of 0.4352 Tilray shares for each outstanding HEXO share, the company announced along with the release of its fiscal third quarter 2023 results.
The acquisition will strengthen Tilray’s leading position in the Canadian cannabis market to a 12.9% pro-forma market share, the company said.
It builds on the successful strategic alliance between the two companies and positions Tilray for continued strong growth and market leadership in Canada, Tilray added.
“We are incredibly excited about our combined prospects moving forward with HEXO and expect a seamless integration of HEXO’s business into our efficient, built-to-last platform,” commented Tilray CEO Irwin D Simon.
“At the same time, we will continue our relentless focus on cost and operational efficiencies and strengthening our industry-leading balance sheet to deliver sustained, profitable growth and shareholder value.”
HEXO CEO Mark Attanasio added: “With the recent headwinds in the cannabis industry, our board determined that HEXO shareholders would benefit from being part of Tilray’s diversified business and from the strong plan in place they have to reinforce their industry leadership, continue to strengthen the top and bottom lines, and to drive value creation.”
Meanwhile, for the quarter ended February 28, 2023, Tilray posted a loss per share of $1.90 compared to earnings per share of $0.09 in the year-ago quarter. This was far below the consensus analyst expectation of a loss per share of $0.06.
Revenue also failed to meet the Street’s expectation of $150.5 million, coming in at $145.6 million, below the $152 million reported for the same period in 2022. On a constant currency basis, revenue was $154.2 million during the quarter, up 2% year-over-year.
Following the release of its results and the acquisition announcement, Tilray stock tumbled 5.5% to US$2.59.
Tilray shares had closed up 5.4% on Monday, buoyed by the news that the Congressional Progressive Caucus was pressuring the Biden administration to expedite its review of marijuana’s designation as a Schedule I drug.
HEXO shares, which closed up 30.1% on rumors of its acquisition by Tilray, were down 23.8% in after-hours trading at US$1.25.
Contact the author at emily.jarvie@proactiveinvestors.com
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