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Marijuana

Valens Moves Into A Cannabis And Hemp Extraction Agreement With HEXO Corp (NYSE:HEXO)

Hexo Corp (NYSE:HEXO), a company focused in the production and distribution of packaged cannabis products, has signed a business deal. The organization says the multi-year extraction services agreement will see it serve Valens with cannabis and hemp extraction services.

A focus into the future

It hopes that within the first year it will have already supplied 30,000kg of the products and then in the second move another 50,000kg.Valens has already decided on the service fee it will charge for the material processing. The company relies upon proprietary extraction processing methods in the delivery of its services.

An official working with Valens outlines that the agreement has clear guidelines. According to him, the only way the deal could be terminated would be if a 90- days notice would be written. The move needs to be done within the first year of operation.

The company says it is adequately planning for the endeavor. One of the officials working with the comoany says they expected to received the first shipment from HEXO early in Q3 of 2019.The processing activities will commence with immediate effect. He adds that they are glad that they already have all the proper licensing from Health Canada to undertake the processing activities under the agreement.

McMillan and Tyler’s perspective

The Vice-President of Strategic Business Development at HEXO Corp James McMillan opines, “HEXO is pleased to work with a quality organization like Valens. On the eve of edibles and concentrate legalization in Canada, this agreement will allow our company to bring an expanded offering to market, creating innovative products to deliver exceptional cannabis experiences to consumers.”

The CEO of Valens GroWorks Tyler Robson has been observing the cannabis market for quite some time and concludes its evolving fast. He looks forward to see matters to do with the pending legalization of additional auxiliary products resolved. According to him, we should await a drastic move before the end of this year. He thanks HEXO for recognized them and the great dedication they are showing to work with them. Robson says they won’t stop in their efforts to help HEXO deliver top quality products.

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Marijuana

This Is Why Hexo Corp (NYSEAMERICAN:HEXO) Acquisition Of Newstrike Is A Big Deal

Hexo Corp (NYSEAMERICAN:HEXO) recently announced that it secured a deal to acquire Toronto-based Newstrike Brands for $263 million CAD, leading to a spike in its stock price.

One of the main reasons for the surge in Hexo Corp’s stock price following the Newstrike acquisition announcement is analyst excitement because the deal is accretive to the company’s production capacity. The acquisition will reportedly grant 470,000 square feet of production space to Hexo Corp’s already existing cultivation space which is about 1.3 million square feet.

“The deal adds 470,000 square feet of production capacity to the more than 1.3 million square feet of cultivation space the company already has,” stated a Motley Fool report.

Hexa’s new acquisition represents a major addition to its growth capacity

The extra operating space is almost a third of the company’s already available space. This also means that the company will become the sixth largest cannabis growth firm in North America. Hexo Corp has been producing an average of 108,000 kgs. However, the acquisition is expected to boost its output to about 150,000 kgs.

This extra production thus means that the company will generate more profits and subsequently more value for investors thus the rise in the stock price. Both companies are expected to generate roughly $10 million annually courtesy of their synergies. Hexo is expected to generate $400 million in sales in 2020.

Hexo Corp’s acquisition of Newstrike also means that the company is now one of the top cannabis growers in Canada. Similarly, it is also on the path to rapid growth and also quickly becoming one of the top cannabis stocks and more investors are taking note. The deal has already been given the green light by the boards of directors of both firms.

Canada has already granted legal status to cannabis consumption in Canada as part of its plan to facilitate a controlled market for the product and also facilitate a strong economy around it. The legalization has encouraged the rapid growth of the industry especially over the past year and Hexo Corp wants to secure a significant piece of the pie.

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