- Canada-based cannabis players including Tilray (TLRY +3.4%), Cronos Group (CRON +15.0%), Sundial Growers (SNDL +14.7%) and Aurora Cannabis (ACB +5.5%) are all trading sharply higher today after HEXO (HEXO +7.8%) agreed to acquire Redecan in a transaction valued at $925M.
- The analysts from Cantor Fitzgerald and BMO capital markets offered divergent views on the deal.
- Maintaining his neutral rating on HEXO, Cantor Fitzgerald analyst Pablo Zuanic predicts the acquisition could propel the company to become the largest player in the Canadian market.
- However, citing among other things the market’s oversupply, Zuanic has slashed the price target to C$10.00 from C$11.25 due to what he identified as “sectoral derating.”
- Meanwhile, BMO’s Tamy Chen calls Redecan a “gem business.” Maintaining her outperform rating, Chen thinks that with today’s announcement HEXO has completed its M&A spree after three acquisitions announced over the past several months.
- In March, HEXO agreed to acquire 48North Cannabis in an all-stock deal valued at $50M including debt.