The acquisition increases Tilray’s cannabis market share by 467 basis points to approximately 13% for the quarter ending May 31. From a category perspective, Tilray becomes No. 1 in flower, oils and concentrates, with 40% market share; No. 2 in pre-rolls, with 29% market share; No. 4 in vapes; and Top 10 in all other categories.
“Acquiring HEXO boosts Tilray’s competitive positioning in the largest, federally legalized cannabis market in the world and, we believe, marks the next evolution of Canadian cannabis,” said Irwin D. Simon, Tilray Brands chairman and CEO. “Having already established ourselves as the clear leader in Canada through an unparalleled portfolio of consumer and medical brands, continuous product innovation, and the lowest-cost production as well as industry-leading extraction capabilities, this transaction affirms and builds on our enviable standing by bringing HEXO’s leading cannabis brands into our state-of-the-art operations. Together, we expect to deliver revenue growth, margin contribution, and value creation for shareholders.”
Tilray’s newly combined brand portfolio now includes Good Supply, RIFF, Broken Coast, Solei, Canaca, HEXO, Redecan, Original Stash and Bake Sale, among others.
With this acquisition, Tilray expects to achieve cost savings in excess of US$27 million on an annualized pre-tax basis, driven by synergies across production, sales, marketing, distribution and corporate savings, with potential incremental upside resulting from consolidating packaging, procurement, freight and logistics. This work builds on Tilray’s progress on optimizing its operations, including improving distribution capabilities while reducing costs related to transportation, waste and other factors, and growing cannabis potencies to 25% on average.
“We are relentlessly focused on growing market share strategically and winning in Canada and will leverage this acquisition to substantially expand our consumer base, serve new segments and additional occasions,” said Blair MacNeil, president, Tilray Canada. “To best take advantage of this opportunity, we are revamping our sales approach to drive education and awareness as we integrate HEXO’s production to generate even greater value from our leading operational processes. Taken together, we intend to capitalize on the commercial and financial benefits that are inherent in combining HEXO with Tilray. These include accelerating the optimization of our operations, sales, and marketing efforts that are already underway. We look forward to our future with great excitement.”
Effective on closing, Tilray’s Canadian leadership team, led by MacNeil and Carl Merton, chief financial officer, Tilray Brands, Inc., will provide a strong foundation for the combined company to accelerate growth and capitalize on the strategic financial, operational and commercial benefits.
“On behalf of HEXO’s board and management team, I’d like to extend our deepest thanks to the entire HEXO team for their continued commitment to our business and customers,” said Charlie Bowman, president and CEO of HEXO. “We are excited for all that is ahead as HEXO enters its next chapter as a part of Tilray, and we wish the HEXO and Tilray teams nothing but the best as they build a stronger Canadian platform that leverages our complementary portfolios of industry-leading brands.”