Tilray offer to buy HEXO in November was turned down as it represented 'less than sufficient value'

Warning message

The subscription service is currently unavailable. Please try again later.
Twitter icon


The offer represented "what may have been a substantial premium for shareholders at the time."

Management for HEXO Corp. was reportedly approached in November 2021 by Tilray Brands, Inc. to buy the Canadian pot producer, but opted to pass on the proposed deal.

According to The Deep Dive, the offer of $2 to $3 a share to acquire the whole company was rejected because it represented “less than sufficient value.”

“This was despite the firm trading at a high of just $2.35 during that same month, and a low of $1.30, with that offer representing what may have been a substantial premium for shareholders at the time,” the website reports.

Although the initial offer fell by the wayside, HEXO entered into an agreement with Tilray the following month.

BMO Capital Markets had earlier been engaged to source alternatives for HEXO after an uneasy period that saw the ouster of both the company CEO and chief operating officer.

In March 2022, Tilray sought to buy up to $211 million of HEXO debt via obtaining senior secured convertible notes.

This past April, the two companies announced they had entered into a definitive agreement to create a strategic alliance. HEXO said the alliance represented “a significant step forward in executing on its strategic plan.”

The transaction, which was expected to close by the end of May 2022, was said to “provide HEXO with a recapitalized balance sheet and the enhanced financial flexibility critical to accelerating its transformation into a cash flow positive business within the next four quarters.”

“Since I arrived, HEXO’s balance sheet has been the biggest impediment to unlocking shareholder value in this tremendous business,” Scott Cooper, President and CEO of HEXO, says in the statement “The alliance will lower costs, take advantage of cost synergies and build shareholder value.”

Per the transaction agreement, Tilray Brands agreed at the time to acquire 100 per cent of the remaining outstanding principal balance, currently US$193 million” of an amended note issued by HEXO to HT Investments MA LLC (HTI). HTI will be issued HEXO’s common share equal to 12 per cent of the amended note.

According to The Deep Dive, HEXO has filed a management information circular related to its arrangement with Tilray regarding the purchase of outstanding debt.

A HEXO press release from last week notes changes have been suggested for the standby agreement “to reflect worsening stock market conditions and a decrease in the company’s share price.” The change would see the standby party initially receive 10,843,373 common shares in the capital of the company as a standby commitment fee.”

e-mail icon Facebook icon Twitter icon LinkedIn icon Reddit icon
Rate this article: 
Article category: 
Regional Marijuana News: