Newstrike Brands Ltd.
We’re driven by our love for cannabis, but our core values make us... up.
Status: SOLD
Website: https://up.ca/pages/whats-up
Overview
Founded in 2013, what would ultimately become Newstrike Brands Ltd. began as an idea between two friends, Jay Wilgar and Travis Kanellos.
Intrigued at the prospect of cannabis becoming legalized and looking for their next venture, the pair founded Hemisphere Pharmaceuticals (“HPI”) and became one of the first federally licensed cannabis producers in the country in late 2016, securing a boutique production facility in Brantford, Ontario.
In May 2017, HPI went public when they completed a reverse takeover of Newstrike Resources Ltd., a TSX-V listed company.
Remaining focused on developing a suite of adult-use brands for the Canadian market, Newstrike partnered with the iconic Canadian band, The Tragically Hip, and brought on Peter Hwang to help lead commercialization efforts, later launching their flagship brand, Up Cannabis.
The combination of well-known brands, state-of-the-art production facilities, broad distribution networks and a talented workforce attracted the attention of Hexo Corp., who ultimately acquired Newstrike in an all-stock deal for $346 million in May of 2019.
Transaction Rationale
The combination of Newstrike and HEXO combined two of the top 10 operators in the Canadian cannabis market at that time.
HEXO had established itself as the market leader in Quebec, while Newstrike had built a presence from coast-to-coast through seven agreements with provincial boards, covering 95% of the Canada.
Both HEXO and Newstrike had formed ‘A-List’ strategic partnerships, being Molson Coors and The Tragically Hip.
Together, the companies had a far more competitive and diversified production infrastructure, and were projected to realize annual synergies in excess of $10 million.
Management Commentary
Jay Wilgar Co-Founder & CEO, March 2019
“Our strength in Ontario and English Canada clearly complements Hexo’s strong position in Quebec and creates an industry leader. The combination will deliver meaningful synergies, a stronger financial position with increased flexibility, and will position the combined company to meet growing consumer demand on a national basis.”