Manitoba Harvest to be acquired by Tilray

Hemp food and supplement manufacturer, Manitoba Harvest, has entered into a definitive agreement to be acquired by Tilray, a global leader in cannabis research, cultivation, processing and distribution.

This first-of-its kind acquisition unites a cannabis pioneer with a leading natural food CPG company to create hemp and CBD-infused food and wellness products for North America.

Under the terms of the Agreement, Tilray will acquire Manitoba Harvest on a cash and debt-free basis, for an aggregate purchase price, including cash and class 2 Common Stock in the capital of Tilray, of up to C$419 million pending the achievement of certain milestones after the closing of the Transaction.

Founded in 1998, Manitoba Harvest is the world’s largest hemp food manufacturer and a leader in the natural foods industry. It produces, manufactures, markets and distributes a broad-based portfolio of hemp-based consumer products, which are sold in over 16,000 stores at major retailers across the U.S. and Canada. Products in the Manitoba Harvest portfolio include: Hemp Hearts™, Hemp Oil™, Hemp Yeah! ™ granola, Hemp Yeah! ™ protein powder and Hemp Bliss™ milk. Manitoba Harvest has plans to launch a line of CBD containing Broad Spectrum Hemp Extracts as well as a line-up of Hemp Yeah! wellness bars this summer.

Together, Tilray and Manitoba Harvest plan to grow both companies’ revenue while bringing nutritious hemp foods and supplements to more households across the U.S. and Canada. The acquisition will expand Tilray’s product portfolio into the natural foods category and bring Manitoba Harvest expertise in working with cannabinoids, including cannabidiol (CBD). By leveraging Manitoba Harvest’s established distribution network, Tilray plans to accelerate its expansion into the U.S. and Canadian markets, where legal, for CBD products. Manitoba Harvest also brings to Tilray an experienced team and manufacturing capabilities, including the addition of two high quality BRC AA+ certified manufacturing facilities as well as significant sales and distribution capabilities.

“Tilray’s acquisition of Manitoba Harvest is a milestone for the cannabis industry. It builds on the strategic partnerships we have formed with consumer brand industry leaders and demonstrates our track record of disrupting the global pharmaceutical, alcohol, CPG, and functional food and beverage categories,” said Brendan Kennedy, Tilray President and CEO. “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 U.S. and Canada.”

Upon completion of the acquisition, Manitoba Harvest will operate as a wholly-owned subsidiary of Tilray, leveraging the Tilray team’s global cannabis industry expertise and other strategic partners. Manitoba Harvest will continue to operate its seed-to-shelf supply chain model and leverage its retail relationships across North America. Tilray and Manitoba Harvest will also work together to develop innovative new CBD wellness products and hemp-based consumer food products.

Additional Transaction Details

Of the aggregate maximum C$419 million purchase price, Tilray will pay C$277.5 million at closing, comprised of C$150 million in cash and C$127.5 million in Tilray Shares. Six months after closing, Tilray will pay C$92.5 million, comprised of C$50 million in cash and C$42.5 million in Tilray Shares. Tilray will issue an additional C$49 million in Tilray Shares based on Manitoba Harvest achieving certain performance milestones in 2019, such amount to be reduced to the extent that some or all of the milestones are not achieved. The transaction will be subject to normal post-closing adjustments.

The closing of this Transaction is subject to customary terms and conditions as well as court approval. The Transaction will be completed by plan of arrangement under the Business Corporations Act of British Columbia The Transaction is expected to close within the next 30 days.

Blake, Cassels & Graydon LLP acted as Canadian legal counsel to Tilray and Cooley LLP acted as Tilray’s U.S. legal counsel. Cowen provided a fairness opinion to Tilray’s board of directors in connection with the transaction.

Stikeman Elliott LLP acted as legal counsel to sellers. Jefferies LLC acted as financial advisor to Compass Group Diversified Holdings LLC in connection with the transaction.