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Tilray makes the richest deal yet in an effort to switch to the US CBD market



Company Tilray Inc. has announced its most expensive acquisition at the beginning of the day, agreeing to spend more than $ 300 million on a company claiming to be the largest hemp producer in the world.

Tilray

TLRY, + 0.71%

agreed to purchase Manitoba Harvest for $ 419 million, or $ 317 million, in cash and shares to strengthen its burden on the US CBD market. Now Tilray expects that already in the summer of this year, the US will start products from the CBD, ̵

1; say managers.

After the adoption of the US Agriculture Bill, which legalized industrial cannabis and removed the CBD from the list of controlled substances used by the Counter Narcotics Board, cannabis operators in Canada fiercely made agreements in the United States to expand operations south of the border. Canopy Growth Corp.

CGC, -2.46%

announced their intention to make significant investments in New York State and Aurora Cannabis Inc.

ACB, -1.70%

ACB, -1.61%

also began acquiring hemp assets. Cronos Group Inc.

CRON, + 1.50%

CRON, + 1.81%

has not yet detected cannabis operations in the United States

Do not miss All: What you need to know about CBD, a non-enhancing cannabis elixir that is not yet fully legal – while

Although the Brightfield Group has said that the cannabis-CBD market in the US could reach $ 22 billion by 2022, the CEO of Tilray Brendan Kennedy does not believe that someone has enough data to create realistic predictions.

"It's impossible to know if this is an exact number or not," said Kennedy. phone interview with MarketWatch. I know this is a great opportunity. If I think of hemp and CBN derived from hemp, this is probably the hottest ingredient in the natural food industry, in the beauty, body care and cosmetics industry. It just seems like there is a very big interest in that particular ingredient today. What I do not know is that it's realistic that it's $ 22 billion.

See also: How Marijuana Can Make Profit Without Bank Selling

Manitoba Harvest Chief Executive Bill Chiasson said that the company has been engaged in business for more than 20 years and is the world's largest hemp producer. It generated C $ 94 million in 2018 sales, which is almost doubling that analysts predict Tilray on its own generate for the year. Tilray reported C $ 36 million in revenue for the first three quarters of the year, and analysts expect the company to report sales in the fourth quarter of C $ 16.5 million, when it comes to earnings on March 18, according to FactSet.

Manitoba Harvest makes products such as granola, protein powder and hemp oil and has 30,000 acres of cultivation contracted this year. Hemp products are sold by retailers in the US and Canada, and it has entered into agreements with similar companies Costco Wholesale Corp.

COST, + 0.76%

Amazon.com Inc.

AMZN, + 1.22%

and Walmart Inc.

WMT, + 2.21%

among other things. hats Despite the fact that the legitimacy of products based on the CBD in the United States is in doubt, Tilray and Harit Manitoba say that new products will comply with all the necessary federal and state rules.

Video: As "California storms" turned the CBD into a million dollar business

Chiasson said adding that the company believed it complied with the relevant state and federal rules. [19659021] "[Food and Drug Administration] it was very clear that it did not want to present claims, specific claims that had not been tested and may"

Tilray buys Manitoba Harvest, legally named FHF Holdings Ltd., from Compass Diversified Holdings LLC

CODI, -0.95%

and other shareholders. Tilray will pay C $ 150 million in cash and C $ 127.5 million in stock when the transaction is closed. Six months later, Tilray will pay an additional $ 50 million in cash and $ 42.5 million in stock. Tilray will also issue an additional US $ 49 million if, in 2019, Manitoba Harvest achieves its performance goals.

The Tilray campaign last year gained 165%, as the S & P 500 index

SPX, + 0.15%

was 1.7%. Tilray walked public at $ 17 and shares topped $ 200 last fall before pulling back. Shares closed at 0.7% to $ 77.03 on Tuesday.


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