RE:RE:RE:RE:RE:Zenabis Q4 FinancialsThe NewStrike deal back in 2019 was viewed as being under-valued at the time due to the demand for growing space etc which (again, at the time) was being looked at as the big determining factor as to which company was the best / biggest. Aurora Cannabis and Canopy Growth built out massive growing capacity during the same period.
Unforunately for the entire Canadian Cannabis sector the slower than expected rollout of Cannabis stores across the country left many producers with more product that what could be supported by the stores that were open. More stores are opening each month with an additional 6 to 700 needed for Ontario alone.
Link to Article Outlining NewStrike Deal being as Under-Valued https://seekingalpha.com/article/4249310-hexo-corp-acquires-newstrike-brands-is-massively-undervalued
The most valuable parts of the NewStrike deal were the supply agreements and brands that NewStrike brought to HEXO. Without NewStrike HEXO would have taken much longer to establish sales channels across the majoirty of Canada. HEXO also aquired the UP Brand from Newstrike and this brand was credited in the March 18th 2021 Q2 report as contributing apx 2 million dollars in sales.
Zenabis will bring new channels to market for Europe and top selling brands by Zennabs that are holding top spots in Quebec.
If it should turn out that HEXO does not need all of the facilities that come along with the Zennabis deal then some of these may be sold off which in turn means cash that can go back towards any debts still owed by Zennabis.
Q
ArnoldLayne wrote: They sure wouldnt make that same mistake twice ? Do you think ? As long as the market will keep hexo at the bottom, I'll gladly add to my position. Hexo is in better shape now than anytime before. Its just the beggining. New all time high will be hit. Those are my predictions, for what its worth ( a lot to me ) glta
VeritasVern wrote: Sure, I guess in the history of mergers there have never been a neutral and/or bad decisions according to your suggestion then? Let's look at the Hexo/Newstrike deal. Has that deal now been assessed as a good decision? FYI HIP shares are now worth a whole 13 cents but more importantly the acquisition gave Hexo more sq/ft and production which turned out to be essentially a mistake as shortly after Hexo had to readjust production and close a facility while incurring writedowns not only in capital but production. Clearly that is viewed as a poor decision and a highly costly one for Hexo and - sorry to say - the original Hip shareholders....
quinlash wrote: HEXO would have done a great deal of research on Zenabis prior to making the deal. The extent which they can research the company far exceeds what anyone on this forum would have access to. They also formed a special committee to research the deal prior to proceeding. The Board of Directors voted in favor of the deal after all of that research was done.
The benefits of doing the deal therefore can be expected to be better for the company vs. not proceeding with the deal.
If your own research does not agree then so be it however consider that HEXO likely has done much more research than you have.
GLTA
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