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.
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.
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]