Shares of cannabis company Hexo (HEXO) - Get HEXO Corp. Report fell Monday after founder and CEO Sebastian St-Louis stepped down effective immediately as the company says it is in advanced discussions with his successor.
St-Louis' resignation comes just weeks after activist investor Adam Arviv sent a letter to Hexo's board demanding significant changes, Yahoo Finance Canada reported.
Those changes were due to "recent dilutive financings, the CEO's misalignment with shareholders, and a lack of basic business skills to lead," the letter stated.
St-Louis will stay on the board of directors for the Ottawa-based company, but will step down as CEO, along with Donald Courtney, the company's chief operating officer.
“The board has established a 'special committee for succession' to identify a new CEO with the experience to defend HEXO's position as a market leader in Canada and secure our place as a top-three global cannabis company," company chair Dr. Michael Munzar said.
Arviv was "an advisor to the family behind Redecan," Yahoo reported. Hexo agreed to acquire the privately-held, Ontario-based cannabis company for C$925 million ($747.5 million)
Hexo will pay for the purchase with C$400 million in cash and C$500 million through the issuance of Hexo common shares at an implied price per share of C$7.53. Redecan shareholders own about 31% of Hexo shares following the close of the transaction.
Hexo shares were falling 3.26% to $2.08 per share on the Toronto Stock Exchange Monday afternoon.