Stockwatch Post
Cannabis Summary for May 28, 2021
2021-05-28 18:05 MT - Market Summary
by Stockwatch Business Reporter
The S&P/TSX Cannabis Index added 10.74 points to 213.34, while the CSE Composite Index lost 7.44 to 793.22. Canada's Hexo Corp. (HEXO) added 75 cents to $8.65 on 9.72 million shares, after agreeing to buy Redecan, the largest private cannabis grower in the country. The nearly billion-dollar deal will see Hexo pay $400-million cash and issue $525-million in shares.
Hexo is overjoyed by the deal, which marks the third -- and by far the largest -- in its recent shopping spree. It is already working on the previously announced takeovers of fellow Canadian growers Zenabis Global Corp. (ZENA: $0.15) for $235-million and 48North Cannabis Corp. (NRTH: $0.18) for $50-million. "We articulated a plan to become a top three cannabis player in the Canadian adult-use market," explained Hexo's co-founder and chief executive officer, Sebastien St-Louis. With today's Redecan announcement -- prepare to dodge some weasels here -- "we believe that we are on the verge of surpassing that objective to become the No. 1 [player]."
Such fudgery has become commonplace as companies vie for the top spot in Canada's competitive cannabis market. In December, Tilray Inc. (TLRY: $20.20) and Aphria agreed to a multibillion-dollar merger that they said would create the "leading adult-use cannabis company" in Canada. That deal closed in April. Top competitor Canopy Growth Corp. (WEED: $31.45) fired back with some acquisitions of its own, recently arranging to "solidify [its] leadership position" by buying The Supreme Cannabis Company Inc. (FIRE: $0.355) for $435-million, with that deal set to close next month. Data analytics firm Hifyre is doing its best to track the numbers. It recently estimated that Tilray holds 18 per cent of the Canadian recreational market, while the combined Canopy-Supreme entity holds 15 per cent. Hexo, once combined with Zenabis, 48North and Redecan, would be in third place at 14 per cent.