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Wednesday, December 6, 2023

Cannabis Weekly Round-Up: Tilray to Acquire HEXO

After posting a C$1.5 billion quarterly loss, Tilray Brands (NASDAQ:TLRY,TSX:TLRY) has confirmed its intention to fully acquire fellow producer HEXO (NASDAQ:HEXO,TSX:HEXO) for C$56 million.

Also last week, a stunning move took place in New Jersey — a multi-state operator is facing license issues after regulators voted against renewing its active cannabis authorization.

Keep reading to find out about more cannabis highlights from the past five days.

Canadian producers set to join forces 

As part of the release of its latest financial results, Canadian producer Tilray confirmed its plan to fully acquire HEXO. Tilray initially bought a US$173 million secured convertible note last year from a former HEXO creditor.

The current version of the arrangement prices the transaction at C$56 million, which indicates a value of US$1.25 per HEXO share.

The deal is expected to close by June of this year, the companies announced.

“We are incredibly excited about our combined prospects moving forward with HEXO and expect a seamless integration of HEXO’s business into our efficient, built-to-last platform,” Irwin Simon, chairman and CEO of the firm, said.

Tilray reported a net loss of C$1.5 billion for the quarter despite a net revenue increase to C$145.6 million.

The firm also reported a non-cash C$1.1 billion net asset reduction, attributing it to higher interest rates and a decline in market cap. However, the company said this reduction won’t impact its compliance with debt, its cash flow or its current liquidity.

Simon told BNN Bloomberg the acquisition has been in the works for some time. Charlie Bowman, president and CEO of HEXO, previously told the Investing News Network that there are certain synergies between the two companies.

New Jersey regulators vote against MSO license renewal

Curaleaf (CSE:CURA) was not able to renew its cannabis license in the state of New Jersey after regulators voted against the multi-state operator (MSO) on Thursday (April 13).

“It seems there’s still a lot of information missing that should be provided, and that should be done in a way, in a manner that is forthcoming and transparent,” Cannabis Regulatory Commission Chair Dianna Houenou, who abstained from the vote, said in relation to Curaleaf’s recent facility closure in New Jersey.

As it stands, Curaleaf’s ability to sell legal cannabis in the state will end on April 21, as per the New Jersey Monitor.

“Commission members cited the closure, along with the company’s clash with unionization and its lack of transparency with the state, as reasons for rejecting Curaleaf’s license renewal,” the report states.

Company executive Boris Jordan responded to the decision with a statement on Twitter Thursday night.

“This type of politicization will only serve to further undermine the state’s nascent cannabis industry,” he said.

Despite the license dispute, Jordan said the company continues to meet regulators’ requirements. “To be clear: Curaleaf is in good standing with the CRC and has fulfilled the requirements necessary for the renewal of our licenses,” the firm said.

Shares of the MSO began sliding in Friday’s (April 14) trading session as the license dispute spooked the market. The company declined in value by 8.36 percent for a price per share of C$3.08 as of 10:00 a.m. EST.

Cannabis company news

  • MediPharm Labs (TSX:LABS,OTCQX:MEDIF) will undertake job layoffs affecting 30 percent of its workforce as the firm integrates VIVO Cannabis, its latest acquisition. Based on these cuts, and previous rounds of layoffs — which were done “separately by both companies in 2022” — the companies have seen their worker base reduced by 45 percent compared to January 2022.
  • Aurora Cannabis (NASDAQ:ACB,TSX:ACB) launched a new slate of higher-dose THC medical products under the banner of MedReleaf Australia. “We are strongly committed to our patient-first approach to cannabis and ensuring access to medical patients, in Australia, and around the world,” Aurora CEO Miguel Martin said.
  • Organigram Holdings (NASDAQ:OGI,TSX:OGI) issued its Q2 2023 fiscal results for investors this past week. The operator reported a net loss of C$7.5 million for the quarter while posting C$39.5 million in revenue. “We are pleased with our results in a quarter with typical seasonality,” Beena Goldenberg, CEO of the firm, said.
  • A new market report by cannabis market researcher New Frontier Data, released this past week, shows some of the remaining potential attached to cannabis investments, currently damaged by declines in investment. “Investors are in the process of recalibrating their strategies for the cannabis market,” New Frontier Data CEO Gary Allen said.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

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