newstrike Archives - Green Market Report

Debra BorchardtMarch 13, 2019
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HEXO Corp. (TSX: HEXO) (NYSE: HEXO) is acquiring  Newstrike Brands Ltd. (TSX-V: HIP) in an all-stock deal valued at approximately $263 million. Newstrike shareholders will receive 0.06332 of a HEXO common share in exchange for each Newstrike common share held. There is a $7.5 million termination fee.

Newstrike is the parent company of Up Cannabis Inc., a licensed producer of cannabis that is licensed to both cultivate and sell cannabis in all acceptable forms. Newstrike, through Up Cannabis and together with select strategic partners, including Canada’s iconic musicians The Tragically Hip, is developing a diverse network of high-quality cannabis brands

“We’re thrilled to welcome the Newstrike team into the HEXO family.  Jay Wilgar, CEO of Newstrike and his team have built incredible relationships, including teaming up with The Tragically Hip, and they share HEXO’s vision of bringing exceptional branded cannabis experiences to adults everywhere,” said Sebastien St-Louis, CEO, and co-founder of HEXO Corp. “With Newstrike, we’re adding talented employees and infrastructure to take HEXO to the next level on our journey to become one of the largest cannabis companies in the world.”

Based on the completion of this acquisition, HEXO estimates that for fiscal 2020 the net and gross revenues from the sale of cannabis in Canada will be in excess of $400 million and $479 million respectively.

“This is the most compelling combination we see in the Canadian cannabis sector.  Our strength in Ontario and English Canada clearly complements HEXO’s strong position in Quebec and creates an industry leader.  The combination will deliver meaningful synergies, a stronger financial position with increased flexibility, and will position the combined company to meet growing consumer demand on a national basis. I believe this transaction is beneficial to our shareholders, customers, and employees. We look forward to working closely with the leadership team to complete this transaction,” added Jay Wilgar, CEO of Newstrike.

According to the company statement, the acquisition highlights include:

  • Capacity boost with state-of-the-art cultivation infrastructure: The Transaction gives HEXO the capacity to produce approximately 150,000 kg of high-quality cannabis annually. The Transaction also provides HEXO access to four cutting-edge production campuses totaling close to 1.8 million sq. ft. of near-term cultivation space and diversified growing and production techniques.  This is in addition to HEXO’s 579,000 sq. ft. facility for a manufacturing and product development center of excellence in Belleville, Ontario.
  • Diversified domestic market penetration: Combined, HEXO, and Newstrike have established distribution agreements in 8 provinces including Ontario, Quebec, British Columbia, Alberta, Saskatchewan, Manitoba, Nova Scotia, and Prince Edward Island, allowing broad consumer access to HEXO’s products across Canada.
  • Premium indoor facility: Newstrike’s licensed indoor facility provides HEXO with access to diversified growing techniques and positions HEXO for flexibility for international exports as global cannabis markets continue to open.
  • Accretive synergies: The combined entity is estimated to realize annual synergies of $10 million, allowing HEXO to operate more efficiently with a commitment to continued excellence.

Video StaffMay 25, 2018

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It’s actually been a fairly quiet week for cannabis financial news.

In political news, the New York Democratic Party said it is endorsing legalizing marijuana. The party recently held its primary and while actress Cynthia Nixon made a big splash, Governor Cuomo overwhelmingly won the race. Nixon was pushing hard for legalization and managed to nudge Cuomo into a more accommodating stance towards legalization.

Cannabis Wheaton (CBWTF) landed a gigantic C$100 million deal with a group of underwriters led by BMO Capital Markets. The group has the option for an over-allotment that could bring in an additional C$15 million. The deal is expected to close near May 31.

Newstrike Resources (NWKRF) snagged a private placement deal valued at $40 million. The net proceeds will be used for growth and working capital.

Aurora Cannabis (ACBFF) is continuing its acquisition push with its latest decision to take a 9% ownership stake in CTT pharmaceutical Holdings valued at $1 million. The company has been on a spending spree as it builds an empire to compete in the Canadian market.

Leafbuyer Technologies (LBUY) was flagged by the OTC Markets group for heavy stock promotion. The company has spent thousands for promotion while reporting a million dollar loss in the last quarter. In fact, most of the company’s revenue has been spent on promotion. The company said its insiders haven’t sold any stock and said the promotions haven’t increased the stock price. The flagging is part of an OTC Markets push to make sure investors are informed about stock promotions.

Cronos Group (CRON) uplisted its stock from the Toronto Venture Exchange to the Toronto Stock Exchange. The stock began trading at its new home on Wednesday.

Practically taking its place is Khiron Life Sciences, which will begin trading on Friday at the Toronto Venture Exchange under the symbol KHRN. It’s the first cannabis producer with core operations in Columbia.


William SumnerApril 2, 2018
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Here are the today’s cannabis news briefs for April 2, 2018:

Aurora Cannabis Inc.

Aurora Cannabis Inc. (ACB) and CanniMed Therapeutics Inc. ( CMED) today announced that Brent Zettl, the CEO of CanniMed, has resigned, effectively immediately. In his place, Andrċ Jérôme has been appointed at interim CEO. As Senior Vice President Business Integration at Aurora, Jérôme was responsible for the integration of acquisitions and the the identification of potential cooperation across existing subsidiaries and joint venture partners. Zettl will continue working with CanniMed and Aurora in an advisory capacity to assist during the transitional period. “”Andrċ is the right person to take on the role of Interim CEO at CanniMed. He is a consummate business professional and team leader with an excellent track record in accelerating growth. We are also very pleased that Brent has agreed to remain available to us as an advisor, which will provide additional support to ensure the transition proceeds smoothly,” said Aurora CEO, Terry Booth, in a statement.

Newstrike Resources Ltd.

Newstrike Resources Ltd. (HIP) announced that its wholly-owned subsidary, Up Cannabis Inc., has today received a cannabis cultivation license for its 160,000 square foot automated greenhouse site in the Niagara region for a term of three years. Cultivation is expected to being this month, with first harvest expected to occur in the third quarter of 2018. Once in full swing, the facility is expected to produce 12,500 kilograms of cannabis by the end of 2018. By the second half of 2018, the company is expected to begin construction on an expansion of the Niagara facility; which will increase the facilities cultivation space by an additional 160,000 square feet and increase its annual production capacity to 27,500 kilograms.

Solis Tek Inc.

Solis Tek Inc. (SLTK) today reported financial results for the year ended December 31, 2017. Revenue in 2017 increased by 5% to $8.98 million with a gross profit of $3.15 million. The net loss for the year was $14 million, compared to the previous years loss of $538,710. The loss increase was primarily driven by higher operating expenses as well as higher stock-based compensation expense, financing costs and changes in fair value of derivative liability. The company currently has $968,000 in cash-on-hand, which is higher than the previous year’s end total of $276,000. “Throughout 2017, we completed much of the foundation work to establish our nutrient vertical, including completing development of our Terpenez essential oil intensifier, which we expect will start generating increasing revenues in 2018. We are confident that we have the right management team in place to execute on our growth strategy and look forward to further expanding the breadth of our vertical markets across the global cannabis industry supply chain,” commented Solis Tek CEO, Alan Lien.


Debra BorchardtJanuary 22, 2018
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The hostile takeover bid between Aurora Cannabis (ACBFF) and CanniMed Therapeutics (CMMDF) is looking less hostile these days. CanniMed said that it will continue discussions with Aurora as the two companies faced a 5pm deadline today. CanniMed said that the two have decided to extend their talks.

During this extension of conversation, neither of the two companies will ask for proxies from their shareholders and Aurora will hit the pause button on buying more shares of CanniMed in the open market. Both companies agree to suspend making public statements about the transaction unless it is mutually agreed. The two companies also agreed not to move forward with discussions on alternative transactions either.

CanniMed said it still plans to hold a special shareholders’ meeting for Thursday, January 25 with the cutoff for proxies on Wednesday at 10 am eastern time with regards to the Newstrike acquisition.

The History Of The Deal

Originally, Aurora Cannabis initiated a plan in November to acquire CanniMed Therapeutics for C$24 a share, which at the time was a premium price. CanniMed rejected the offer and began a campaign the fight the acquisition. A war of nasty words took place with competing press releases as each company trashed the other publicly. CanniMed then decided to acquire Newstrike Resources (NWKRF) as a way to combat the deal.

Aurora publicly stated it didn’t think the Newstrike acquisition was a good deal for CanniMed and last week CanniMed said it was postponing a shareholder vote on the deal. Newstrike shareholders had voted in favor of being acquired by CanniMed. Today it is saying the vote will still be held. One can only imagine the shareholder’s frustration as this back and forth.

Aurora Could Buy Both

Now it looks as if Aurora could end up buying both properties. This is in contrast to the original plan that a Newstrike deal with CanniMed would cause the Aurora deal to terminate. If that were to happen (Aurora buying both), Aurora would have to raise its offer price as the stock values of all three parties have risen as the hostile bid drama has played out over the past few months.

CanniMed’s Toronto shares were lately trading at C$34, popping from C$20 at the end of December. Aurora’s shares lately traded at C$13, almost doubling from C$7.74 a month ago. Newstrike shares traded in the 50 cent range a month ago and closed on Friday at C$1.47.

If all three companies combined, the valuation could put it on par with Canopy Growth (WEED), currently Canada’s largest cannabis company with a market cap of C$7 billion.

 


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