Please ensure Javascript is enabled for purposes of website accessibility

HEXO to Raise Up to 1.2 Billion Canadian Dollars in Fresh Capital

By Eric Volkman - Updated Apr 16, 2021 at 4:22PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company says the funds will be used for activities such as acquisitions and partnerships.

Hardly for the first time in its corporate life, HEXO (HEXO -1.66%) is gearing up to raise some funds. The company announced on Thursday that it has filed regulatory paperwork stating that it aims to amass up to 1.2 billion Canadian dollars ($958 million) over the next 25 months. This can, and likely will, take different forms, including the issuance of stock, warrants, or the combination of the two known as "units" -- an increasingly common instrument of fund-raising issued by marijuana companies of late.

In its press release trumpeting the declaration, HEXO quoted its CEO Sebastien St-Louis as saying that the monies raised will "provide maximum flexibility as we continue to pursue strategic initiatives in both the United States and Canada."

"We have now started to deploy capital in the United States, are remaining active in [mergers and acquisitions] and are in ongoing discussions with potential non-beverage [consumer packaged goods] partners which we expect will require additional capital as we continue to execute on our growth and expansion strategy," he added without providing further detail.

Marijuana flower on Canadian currency.

Image source: Getty Images.

HEXO has recently put its money where its mouth is, in terms of acquisitions and partnerships. In February, the company announced it struck a deal to buy Zenabis Global, a Canadian peer, for the equivalent of $186 million. The company is also teaming up with Molson Coors Brewing to co-develop cannabis-laced drinks, which could be a big hit in the U.S. in particular if federal marijuana laws are ever relaxed.

Investors, however, are likely concerned that the upcoming capital raises will dilute their share holdings. On Friday, HEXO stock fell by 3.2%, in contrast to the nearly 0.4% gain of the S&P 500 index.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

HEXO Stock Quote
HEXO
HEXO
$0.21 (-1.66%) $0.00
Molson Coors Beverage Company Stock Quote
Molson Coors Beverage Company
TAP
$55.34 (-0.50%) $0.28
Zenabis Global Inc. Stock Quote
Zenabis Global Inc.
ZBISF

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.