Skip to main content

Hexo Higher on Accord to Buy Cannabis Rival 48North

Hexo agreed to buy cannabis rival 48North for stock valued at C$50 million (US$41.3 million).

Hexo  (HEXO) - Get HEXO Corp. Report agreed to acquire rival cannabis company 48North NCNNF in a stock swap valued at about C$50 million (US$41.3 million).

The U.S.-listed shares of Hexo, Ottawa, at last check rose 1.7% to $6.17. The U.S. shares of 48North, Toronto, were off 2.8% at US$0.136.

The deal is part of Hexo's effort to become a top-two cannabis provider in Canada for adult-use sales, Sebastien St-Louis, co-founder and chief executive of Hexo, said in a statement.

Under the terms, Hexo will swap 0.02366 share for each 48North share. That equals a premium of 20% based on the 10-day volume-weighted-average price of 48North and Hexo at the close of markets on May 14.

Stocks Dip Monday as Tech Leads Wall Street Lower

Scroll to Continue

TheStreet Recommends

The directors and officers of 48North, as well as certain of the company's other holderes, have committed to vote a total of 25.9% of 48North’s shares in favor of the transaction.

At closing, Hexo holders will own 96% of the combined company's shares and 48North holders 4%.

Hexo said the deal could provide $12 million of potential synergies within a year after it closes.

Both companies' boards have approved the terms. The Hexo-48North deal is expected to close on June 1, subject to conditions including court, regulatory and stock-exchange clearances, the companies said.

48North has the right to accept a higher bid in certain circumstances. Hexo would have five business days to match such a proposal. And 48North would pay Hexo C$2 million if the deal is terminated under certain conditions.

Cannabis Stocks Watchlist: A Finalized Marijuana Merger