- ISS Concludes the Arrangement Makes Strategic Sense
- No Viable Alternatives for HEXO Other Than the Arrangement with
Tilray
- Shareholders Who Have Questions or Need Assistance Voting
Should Contact Kingsdale Advisors, by phone at 1-866-581-1489
(North America Toll Free) or 416-623-2516 (Outside North America),
or by email at contactus@kingsdaleadvisors.com
- For more information, please visit www.HEXOVOTE.com
HEXO Corp. (TSX: HEXO; NASDAQ: HEXO) (“HEXO” or the
“Company”) is pleased to announce that Institutional
Shareholder Services Inc. ("ISS"), a leading independent
proxy advisory firm, has issued a report recommending that HEXO
Shareholders vote FOR the arrangement agreement (the
"Arrangement") between HEXO and Tilray Brands, Inc.
(“Tilray”).
In reaching its conclusion, ISS noted1:
- “The transaction makes strategic sense as the combination will
provide shareholders with the opportunity to continue to hold their
investment in the assets of the company as well as participate as
shareholders of the purchaser and as shareholders of a larger and
more diversified company."
- “The all-share consideration conveys a value transfer per HEXO
share of C$1.52 [USD$1.25] which represents a 10.1 percent discount
to the unaffected share price, and although potential governance
concerns have been raised pertaining to the lack of public
disclosure relating to any strategic review process, elevated
change of control payments and termination fee arrangements, and
reasonable concerns may exist that the offer could fail to capture
the value of the company which would be discovered in a competitive
bidding process, the risks and benefits of the transaction appear
to have been appropriately weighed against the company's only
likely alternative, being the status quo.”
- “On balance, and in light of the reasonable strategic
rationale, company's financial going concern issues, liquidity
concerns, and non-approval risk associated with the arrangement,
shareholder approval of this resolution is warranted.”
Arrangement Agreement with Tilray
Under the terms of the Arrangement Agreement, Tilray will
acquire all of the issued and outstanding common shares of the
Company (the “Company Shares”). HEXO Shareholders will
receive 0.4352 of a share of Tilray common stock (“Tilray
Shares”) in exchange for each whole Company Share held.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU
OWN
Shareholders are encouraged to vote in advance of the proxy
cut-off time of 4:00 p.m. (EDT) on June 12, 2023, in accordance
with the instructions accompanying the form of proxy or voting
instruction form mailed to Shareholders together with the Circular.
Further details and voting instructions can be found in the
Circular or at www.HEXOVOTE.com.
To keep current with and obtain information about voting your
Company Shares, please visit www.HEXOVOTE.com.
HEXO’s Board of Directors and the special committee of the Board
comprised solely of independent directors of the Company,
unanimously recommend that Shareholders vote FOR the Arrangement at
the Meeting. The Board and the Special Committee have determined
that the Arrangement, as well as the previously announced and
concurrently signed Waiver and Amendment Agreement entered into by
the Company and Tilray are in the best interests of the Company and
that the Arrangement is fair to Shareholders.
Vote FOR the special resolution
approving the Arrangement with Tilray
The Board reminds all shareholders to vote well in advance of
the proxy cut-off time of 4:00 p.m. (EDT) on June 12, 2023.
The Company has retained Kingsdale Advisors to act as strategic
shareholder advisor and proxy solicitation agent, and Kingsdale
Advisors is available to answer information requests from
Shareholders with regard to shareholder approval of the Arrangement
and related matters.
Communications with Kingsdale Advisors may be made by telephone
at 1-866-581-1489 toll-free in North America or at 416-623-2516
outside of North America, or by email at
contactus@kingsdaleadvisors.com.
About HEXO Corp.
HEXO is an award-winning licensed producer of premium products
for the global cannabis market. HEXO delivers a thoughtfully
curated portfolio of both recreational and therapeutic cannabis
products that inspire customer loyalty. HEXO’s brands include HEXO,
Redecan, Original Stash, Bake Sale and T 2.0, as well as medical
cannabis products.
HEXO’s world-class Canadian grow sites are unmatched in size,
technological advantage and yield of high-quality cannabis, driving
innovation through every step of the process. HEXO operates three
major grow sites in Ontario and Québec, including one of the
largest growth facilities in North America. HEXO Corp. is a
publicly traded company under the tickers (TSX: HEXO) and (NASDAQ:
HEXO).
Forward-Looking Statements
This press release contains forward-looking information and
forward-looking statements within the meaning of applicable
securities laws (“Forward-Looking Statements”). Forward-Looking
Statements relate to future events or future performance, reflect
current expectations or beliefs regarding future events and are
typically identified by words such as “anticipate”, “believe”,
“could”, “estimate”, “expect”, “intend”, “likely”, “may”, “plan”,
“seek”, “should”, “will” and similar expressions suggesting future
outcomes or statements regarding an outlook. These include, but are
not limited to, statements with respect to the Arrangement,
including the expected timing of closing and various steps to be
completed in connection with the Arrangement, statements with
respect to the impact of the Arrangement on the value of the Tilray
Shares, and other statements that are not historical facts.
Forward-Looking Statements are made based upon certain
assumptions and other important factors that, if untrue, could
cause the actual results, performance or achievements of the
Company to be materially different from future results, performance
or achievements expressed or implied by such statements. There can
be no assurance that such Forward-Looking Statements will prove to
be accurate. Such Forward-Looking Statements are based on numerous
assumptions, including assumptions regarding the ability to
complete the Arrangement on the contemplated terms, that the
conditions precedent to closing of the Arrangement can be
satisfied, and assumptions regarding present and future business
strategies, local and global economic conditions, and the
environment in which the Company operates.
Although the Company believes that the Forward-Looking
Statements in this news release are based on certain expectations
and assumptions that are current, reasonable and complete, these
statements are by their nature based on assumptions and involve
known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the
Company or Tilray to be materially different from any future
results, performance or achievements expressed or implied by the
Forward-Looking Statements. Forward-looking statements are subject
to a variety of risks, uncertainties and other factors which could
cause actual events or results to differ from those expressed or
implied by forward-looking statements, including, without
limitation: there can be no certainty that the Arrangement will be
completed and, if the Arrangement is not completed, the Company
will be confronted with immediate or near term default under the
Amended Senior Secured Note and there may be a significant decline
in the trading value of the Company Shares; Shareholders will
receive a fixed number of Tilray Shares which will not be adjusted
to reflect any change in the market value of the Tilray Shares or
Company Shares prior to the closing of the Arrangement; the Company
will incur costs even if the Arrangement is not completed and may
have to pay a company termination fee or a reimbursement fee to
Tilray; while the Arrangement is pending, the Company is restricted
from taking many actions; there can be no assurance that the
anticipated benefits of the Arrangement will be realized as
forecasted, including that the integration of Tilray and the
Company will occur as planned and/or that any potential synergies
will be achieved; the Company will not continue as a public company
and potential opportunity for growth will be eliminated; the
Arrangement may divert the attention of the Company’s management;
the Company’s business relationships may be subject to disruption
due to uncertainty associated with the Arrangement; Shareholders
interest in the Company’s business will be diluted; the business of
Tilray after completion of the Arrangement will be subject to the
risks currently affecting the businesses of Tilray and the Company;
certain third parties may have the right to terminate their
contracts, agreements or other arrangements with the Company as a
result of the change of control of the Company that would occur
upon completion of the Arrangement and therefore Tilray may not
have the full benefit of the rights and assets it is seeking to
acquire through its acquisition of the Company pursuant to the
Arrangement; and general business, economic, competitive,
political, regulatory and social uncertainties, including
uncertainty related to the cannabis markets.
Forward-Looking Statements should not be read as guarantees of
future performance or results. Readers are cautioned not to place
undue reliance on these Forward-Looking Statements, which speak
only as of the date of this press release. Events or circumstances
could cause the Company’s actual results to differ materially from
those estimated or projected and expressed in, or implied by, these
Forward-Looking Statements. Important factors that could cause
actual results to differ from these Forward-Looking Statements are
included in the “Risk Factors” section of the Company’s Annual
Information Form, as supplemented by the “Risks and Uncertainties”
section of the Company’s Management Discussion and Analysis for the
three and six months ended January 31, 2023 (“Q2 2023
MD&A”).
Readers are further cautioned that the lists of factors
enumerated in the “Risk Factors” section of the Company’s Annual
Information Form and the “Risks and Uncertainties” section of the
Q2 2023 MD&A that may affect future results are not exhaustive.
Investors and others should carefully consider the foregoing
factors and other uncertainties and potential events and should not
rely on the Company’s Forward-Looking Statements to make decisions
with respect to the Company. The Company disclaims any intention or
obligation, except to the extent required by law, to update or
revise any Forward-Looking Statements as a result of new
information or future events, or for any other reason.
1 Permission to use quotations neither sought nor obtained from
ISS
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version on businesswire.com: https://www.businesswire.com/news/home/20230526005085/en/
For media or investor inquiries:
invest@hexo.com
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