Molson Coors will have a 57.5% stake in the firm and three board eats whilst Hydropothecary will hold the remaining stake and two board seats.
The companies are aiming to close the deal before September 30, pending certain conditions such as the "execution and delivery of various transaction agreements, including governance documents and R&D and supply agreements".
The hundreds of active molecules in the marijuana plant can be transformed into various products beyond just ones that give a buzz, said Hexo CEO Sebastien St. Louis. Hydropothecary will own the remaining ownership interest. The business's revenue was down.2% on a year-over-year basis. equities research analysts expect that Molson Coors Brewing Co Class B will post 4.84 earnings per share for the current fiscal year.
In a statement, Molson Coors President and CEO Frederic Landtmeters said the companies will aim to be a "market leader in offering Canadian consumers new experiences with quality, reliable and consistent non-alcoholic, cannabis-infused beverages".
The brewer is the latest to capitalize on Canada's decision to legalize recreational marijuana later in the year, a market industry watchers say could be worth $5 billion to $10 billion. "Indeed, our own consumer survey work in Canada, as well as consumer survey work conducted by Deloitte, indicate that only 20% of users regularly consume alcohol when using cannabis".
The Hydropothecary Corporation partners with Molson Coors and the pair hope to develop many cannabis beverages ahead of the national recreational legalization of cannabis in Canada.
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"There is a paradigm shift underway and cannabis has the potential to provide answers to the alcoholic drinks industry's existential questions", said Spiros Malandrakis, head of alcoholic drinks at Euromonitor.
Cannabis is set to be legalized in Canada on October 17, though cannabis-infused edibles and beverages won't immediately be available. Constellation Brands, the beer giant behind Corona, paid $191 million for a 9.9% stake in Canopy Growth, a Canadian marijuana producer, in October of previous year.
Gatineau, Quebec-based HEXO now operates with more than 300,000 square feet of production capacity with an additional 1,000,000 square feet of expansion set to be completed by the end of the year.
Meanwhile, Molson Coors reported that it earned US$424.1 million or $1.96 per diluted share in the second quarter.
Revenues for the period ended June 30 slipped to almost US$3.1 billion, slightly below expectations.
Hunter added: "We were pleased with the sequential improvements in the second quarter for top and bottom line results".