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Canadian cannabis company HEXO (HEXO - Get Report) announced it entered into a definitive agreement to acquire Newstrike Brands in an all-share transaction valued at about $263 million. 

HEXO shares are up 3% Tuesday. 

The deal would add 470,000 square feet of production space to HEXO's operations with pro forma annual net revenue expected to reach $400 million ending July 2020. 

"We're thrilled to welcome the Newstrike team into the HEXO family. Jay Wilgar (CEO of Newstrike) and his team have built incredible relationships, including teaming up with The Tragically Hip, and they share HEXO's vision of bringing exceptional branded cannabis experiences to adults everywhere," said Sebastien St-Louis, CEO and co-founder of HEXO.

The purchase still requires the approval of 66.67% of shareholder votes before it becomes official. 

HEXO already has a big backer in beer-maker Molson Coors (TAP - Get Report) , which announced a joint venture with the company to develop non-alcoholic, cannabis-infused beverages for the Canadian market. 

The joint venture is structured as a standalone start-up company featuring its own board of directors. Molson Coors Canada has a 57.5% stake in the joint venture. 

"HEXO continues to lead the way for smoke-free cannabis innovation in Canada. We are excited about this partnership with Molson Coors Canada, an iconic leader in adult beverages, as we embark on the journey of building a brand new market," St-Louis said at the time. 

Seaport initiated coverage of HEXO with a buy rating and C$12 price target Wednesday. Read about it on RealMoney here.  

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