The HEXO acquisition provides several key strategic benefits, including:
- Creates Largest Canadian Cannabis LP by Revenue1, Strengthening Tilray’s #1 Market Share Position. Tilray expands its leading cannabis market share position in Canada with pro-forma cannabis market share increasing by 467 basis points to ~13% for the quarter ended May 31, 2023, including the #1 position in almost all markets.From a category perspective, Tilray becomes #1 in Flower (40% market share with an extensive combined genetics library to fuel product innovation and growth), Oils, and Concentrates, and #2 in Pre-Rolls (29% market share), #4 in Vape, and Top 10 in all other categories.
- Establishes Unrivaled Portfolio of High-Growth Brands. Tilray amplifies its market-leading offering and substantially expands its base of consumers and patients with a portfolio consisting of the highest growth consumer and medical brands in the Canadian cannabis market across the premium, mainstream, and value segments.Tilray’s newly combined brand portfolio now includes Canada’s top-selling brands such as Good Supply, RIFF, Broken Coast, Solei, Canaca, HEXO, Redecan, Original Stash, and Bake Sale, among others.
- Enhances Tilray’s Position in Growing Premium Pre-Roll Segment. HEXO’s state-of-the-art production process provides significant opportunities for Tilray to meet growing consumer demand for premium pre-roll and cone-style cannabis products, representing a significant margin opportunity in a category which is expected to surpass flower on a revenue basis.
- Fortifies Commercial Network Through Collective Sales, Marketing and Distribution Force. Tilray and HEXO will optimize their sales, marketing, and distribution networks to strengthen Tilray’s commercial footprint and hasten market share growth.
- Enables Accelerated Cost Savings and Earnings Growth. With this acquisition, Tilray expects to achieve additional cost savings in excess of US$27M 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 substantial progress optimizing its operations including improving distribution capabilities while also achieving significant reductions in costs related to transportation, waste, and other factors, and growing cannabis potencies to 25% on average.
- Scaled Platform Empowers Tilray to Stay Ahead in Rapidly Consolidating Market. The combined organization is expected to result in increased economies of scale to succeed in today’s increasingly competitive and rapidly consolidating cannabis market.
