HEXO Corp shares fell more than 25% on Tuesday after the company revealed it will be acquired by Canadian cannabis market leader Tilray Brands for $56 million in an all-stock deal.
After initially spiking on Monday to US$1.64 on rumors of the acquisition, HEXO’s share price reversed sharply on confirmation of the deal. HEXO stock was down 26.3% at US$1.21 on Tuesday morning, modestly lower than its opening price on Monday of US$1.28.
Tilray will acquire HEXO through the issuance of 0.4352 Tilray shares for each outstanding HEXO share, an implied purchase price of US$1.25 per HEXO share on the volume weighted average price of Tilray shares on the Nasdaq for the 60-day period ended on April 5, 2023, the two companies announced after the closing bell on Monday.
Expected to close in June 2023, the deal strengthens Tilray’s leading position in the Canadian cannabis market to a 13% market share up from 8% currently.
Tilray’s shares had also fallen on Tuesday following the acquisition announcement and the release of its fiscal third quarter 2023 results, down 6.4% to US$2.57.
Contact the author at emily.jarvie@proactiveinvestors.com
Follow her on Twitter @emilyjjarvie