HEXO Corp. announced its acquisition of Zenabis Global Inc. earlier this week, a major headline that sees the Canadian licensed producer planting a flag in Europe’s cannabis market. The deal was inked at $235 million, a standout sum that adds to the tentative optimism surrounding large-scale cannabis M&A in 2021.
HEXO will pick up Zenabis’ two indoor cultivation facilities and 2.1 million square feet of greenhouse space (all located in Canada) to ramp up capacity with another 111,200 kg of production annually.
“The transaction gives HEXO immediate access to the European medical cannabis market through Zenabis’ local partner, with an established facility in the European Union supplying pharmaceutical products to the European market,” according to a press release announcing the move. “The facility also serves as a European Union Good Manufacturing Practice packaging and distribution center for medical cannabis products produced in Zenabis’ Atholville facility.”
Atholville is located in New Brunswick, Canada. Zenabis’ local partner on the ground in Europe is ZenPharm, based in Malta.
“We’re thrilled to welcome the Zenabis team into the HEXO family. Zenabis has built solid relationships and they share HEXO’s vision of bringing exceptional branded cannabis experiences to adults everywhere, in Canada and abroad” said Sebastien St-Louis, CEO and co-founder of HEXO Corp., in a public statement. “We are proceeding with this transaction because we believe it should be accretive for our shareholders, and it also positions HEXO for accelerated domestic and international growth while supporting near-term requirements for additional licensed capacity. HEXO’s growth strategy includes expanding our global presence, and this acquisition is an important step in that direction.”
On the past five days of trading (as of Feb. 17), HEXO is down 6%.