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Tilray buys world's largest hemp food manufacturer Manitoba Harvest for C$419M

Tilray is forging ahead in the lucrative market for cannabidiol, which is derived from hemp plants
merger metaphor
Products in Manitoba Harvest's portfolio include Hemp Oil, Hemp Yeah! Granola and Hemp Yeah protein powder

Tilray Inc (NASDAQ:TLRY) is splashing out and paying C$419 million to buy Manitoba Harvest, which bills itself as the world’s largest hemp food manufacturer.

The deal allows the cannabis company to forge ahead in the lucrative market for cannabidiol (CBD), which is derived from hemp plants, as well as sell hemp foods and supplements.

“We’re excited to work with Manitoba Harvest to develop and distribute a diverse portfolio of branded hemp-derived CBD food and wellness products in the US and Canada,” said Brendan Kennedy, Tilray’s CEO, in a statement.

READ: Tilray acquires Natura Naturals Holdings in deal worth up to C$70M

Under the agreement’s terms, Tilray, which is based in Nanaimo, British Columbia, will acquire Manitoba, which is based in Winnipeg,  in a cash and stock deal worth up to C$419 million (US$317 million) pending the achievement of certain milestones after the closing of the transaction.

Tilray will pay C$150 million in cash and C$127.5 million in shares upon the closing of the transaction. Six months later, Tilray will pay C$50 million in cash and C$42.5 million in stock. Tilray will also issue an additional C$49 million in stock if Manitoba Harvest achieves performance milestones in 2019.

READ: Tilray and Anheuser-Busch InBev enter partnership to research cannabis drinks

By leveraging Manitoba’s distribution network, Tilray plans to accelerate its expansion into the US and Canada, where legal, for CBD products. The passage of the US farm bill, which sanctions industrial hemp and CBD, represents a windfall for companies like Tilray that are eager to sell CBD products in the US.

Products in the Manitoba Harvest portfolio include Hemp Hearts, Hemp Oil, Hemp Yeah! Granola, Hemp Yeah protein powder and Hemp Bliss milk. Manitoba has plans to launch a line of CBD containing hemp extracts as well as a line-up of Hemp Yeah! Wellness bars this summer.

Tilray shares traded 6.6% higher at $82.11 in morning trade on Wednesday.

Contact Ellen Kelleher at [email protected]

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