Closing of acquisition officially unites cannabis pioneer with leading natural food CPG company with vision to create hemp and CBD-infused food and wellness products for North America
Tilray, Inc., a global leader in cannabis research, cultivation, production and distribution, is pleased to announce the closing of a previously announced definitive agreement in which Tilray has acquired all of the issued and outstanding securities of FHF Holdings Ltd., from Compass Group Diversified Holdings, LLC and other shareholders of Manitoba Harvest. Under the terms of the Agreement, Tilray has acquired Manitoba Harvest on a cash and debt-free basis, for an aggregate maximum purchase price, including cash and class 2 Common Stock in the capital of Tilray, of C$419 million pending the achievement of certain milestones after the closing of the Transaction.
Founded in 1998, Manitoba Harvest is the world’s largest hemp food manufacturer and a leader in the natural foods industry. It produces, manufactures, markets and distributes a broad-based portfolio of hemp-based consumer products, which are sold in over 16,000 stores at major retailers across the U.S. and Canada. Products in the Manitoba Harvest portfolio include: Hemp Hearts™, Hemp Oil™, Hemp Yeah! ™ granola, Hemp Yeah! ™ protein powder and Hemp Bliss™ milk. Manitoba Harvest has plans to launch a line of CBD containing Broad Spectrum Hemp Extracts as well as a line-up of Hemp Yeah! wellness bars this summer.
Together, Tilray and Manitoba Harvest will strive to grow both companies’ revenue while bringing nutritious hemp foods and supplements to more households across the U.S. and Canada. The acquisition will expand Tilray’s product portfolio into the natural foods category and bring Manitoba Harvest’s expertise in working with cannabinoids, including cannabidiol, to Tilray. By leveraging Manitoba Harvest’s established distribution network, Tilray plans to accelerate its expansion into the U.S. and Canadian markets, where legal, for CBD products. Manitoba Harvest also brings to Tilray an experienced team and manufacturing capabilities, including the addition of two high quality BRC AA+ certified manufacturing facilities as well as significant sales and distribution capabilities.
“We’re proud to officially welcome Manitoba Harvest to Tilray’s growing portfolio of brands and network of experts,” Brendan Kennedy, Tilray President and CEO. “We look forward to working collaboratively to develop and distribute a diverse portfolio of branded hemp-derived CBD food and wellness products in the U.S. and Canada.”
“We are excited about being an important part of the growth strategy for Tilray,” said Bill Chiasson, Manitoba Harvest CEO. “By leveraging our combined strengths and capabilities, we hope to accelerate our mission of transforming consumer health through the power of hemp.”
Manitoba Harvest will operate as a wholly-owned subsidiary of Tilray, leveraging the Tilray team’s global cannabis industry expertise and other strategic partners. Manitoba Harvest will continue to operate its seed-to-shelf supply chain model and leverage its retail relationships across North America. Tilray and Manitoba Harvest will also work together to develop innovative new CBD wellness products and hemp-based consumer food products.
Additional Transaction Details
Of the aggregate maximum C$419 million purchase price, Tilray paid C$277.5 million at closing, comprised of C$150 million in cash and C$127.5 million in Tilray Shares. Six months after closing, Tilray will pay C$92.5 million, comprised of C$50 million in cash and C$42.5 million in Tilray Shares. Tilray will issue an additional C$49 million in Tilray Shares based on Manitoba Harvest achieving certain performance milestones in 2019, such amount to be reduced to the extent that some or all of the milestones are not achieved. The transaction will be subject to normal post-closing adjustments.
Blake, Cassels & Graydon LLP acted as Canadian legal counsel to Tilray and Cooley LLP acted as Tilray’s U.S. legal counsel. Cowen provided a fairness opinion to Tilray’s board of directors in connection with the transaction.
Stikeman Elliott LLP acted as legal counsel to sellers. Jefferies LLC acted as financial advisor to Compass Group Diversified Holdings LLC in connection with the transaction.
Date: March 4, 2019
Source: Financial Post