Shares of Canadian cannabis company Hexo Corp. (HEXO) - Get Report jumped Friday after the company announced the purchase of Redecan, Canada's largest privately-owned licensed producer, for C$925 million ($766.37 million).
Hexo will pay for the purchase with C$400 million ($331.4 million) in cash and C$500 million ($414.25 million) through the issuance of Hexo common shares at an implied price per share of C$7.53 ($6.24). Redecan shareholders will own about 31% of Hexo shares following the close of the transaction.
Shares of Hexo were rising 14.7% to $7.49 Friday morning.
"We articulated a plan to become a top three cannabis player in the Canadian adult-use market,” said Hexo CEO and co-founder Sebastien St-Louis. “With today’s announcement, we believe that we are on the verge of surpassing that objective to become the number one licensed producer by recreational market share."
Following the transaction, Hexo will be one of the leaders in dried flower by volume in Canada. The company says it will also be the industry leader for cannabis-infused beverages through the Truss Beverages brand, and that it will also make gains in the oils and capsules and pre-roll categories.
Hexo has been busy with acquisitions this month.
Two weeks ago, the company agreed to acquire rival cannabis company 48North in a stock swap valued at about C$50 million (US$41.3 million).
The cannabis industry in general has been hot for mergers and acquisitions in recent weeks.
Earlier this month, Trulieve Cannabis (TCNNF) - Get Report purchased Harvest Health & Recreation for about $2.1 billion, creating what the companies said would be the largest U.S. multistate cannabis firm.
The combined business would operate in 11 states, including 22 cultivation and processing facilities with a total capacity of 3.1 million square feet and 126 dispensaries.
Cannabis mergers and acquisitions have ramped up recently, with 98 taking place in the industry this year through the week ended April 30, Dow Jones reported.