Tilray has successfully completed its acquisition of rival Hexo Corp, creating what it says is now the largest Canadian cannabis company by revenue.
On Thursday June 22, Tilray announced that the long awaited deal had closed, giving it a reported 44% boost in market share.
Alongside the boost to market share, helping the newly combined entity challenge Canopy Growth for dominance in the market, the new tie-up will reportedly enable the pair to achieve much needed cost savings of $27m a year.
Tilray issues roughly 19.5m common shares in relation to the transaction, seeing holders of Hexo’s shares receive 0.4352 Tilray shares per Hexo share. Hexo’s shares have now ceased trading.
READ MORE: Hexo Corp Records Falling Revenues and $129m in Losses as it Approves Tilray Takeover
Hexo’s former Chief Financial Officer Julius S. Ivancsits, who has left his job as part of the acquisition alongside CEO Charlie Bowman, believes this is just the start of greater consolidation to come in the Canadian market.
He told Market Watch: “Everyone is raising capital to prepare for a longer haul,” he said. “You’re going to see a lot of the smaller players getting absorbed. … Price compression requires scale.”
Both companies remain unprofitable, with Hexo reporting losses of over $129m in its third quarter alone earlier this month. Tilray meanwhile published a net loss of over $1.2bn during its most recent quarterly update.
