Hexo to acquire Redecan in bid for more market share

Consolidation in the cannabis industry continues, giving Hexo the potential of becoming the top producer in Canada.
redecan

Hexo, one of the three main companies that has been driving a wave of consolidation in the cannabis industry, has made another deal, announcing its plans to acquire fellow licensed producer Redecan.

The cash-and-share deal, valued at $925 million, is still subject to customary closing conditions and approvals.

Redecan sells across flower, vape, oil and capsule formats – the latter two of which the company says are “top sellers” in their category – but a major gain for Hexo is the “Redee” pre-roll format. The straight, cigarette-like format has resulted in Redecan leading market share in the pre-roll category in Ontario, British Columbia, Alberta, and Saskatchewan. The proprietary technology used to create them was described by Hexo as being “highly efficient” and creating some of the highest gross product margins in cannabis, something that has been incredibly important to producers as they become more focused on revenue and profitability.

Hexo also cited efficiency in Redecan’s manufacturing and packaging processes as being highlights of the acquisition.

The acquisition is the latest in a series of deals consolidating Canada’s cannabis industry, spurred in no small part by Hexo’s previously announced acquisitions of 48North and Zenabis. The producer previously said that its goal was to be either first or second in market share in different provinces across Canada, claiming to have already achieved that goal in its home province of Quebec and in the national beverage category through Truss, its joint venture with Molson Coors.

In today’s announcement, Sebastien St-Louis, CEO and co-founder of Hexo, said the company believes it is now “on the verge of surpassing that objective” and becoming the top producer by market share across the country.

Hexo will be in tight competition for that title, though. Canopy Growth has been looking to keep its place near the top of the industry, helped this year by acquiring Supreme and Ace Valley. There is also the recently finalized merger between Tilray and Aphria, who were already among Canada’s largest producers when the deal was first announced last year.

 

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