HEXO announces closing of Redecan transaction

HEXO Corp (“HEXO” or the “Company”) (TSX: HEXO; NASDAQ: HEXO) is pleased to announce completion of the previously announced acquisition of all of the outstanding shares of the entities that carry on the business of Redecan, Canada’s largest privately-owned licensed producer (the “Transaction”). At closing, HEXO paid the selling shareholders of Redecan $400 million in cash (subject to certain customary closing adjustments) and delivered 69.7 million newly issued common shares of HEXO (the “Consideration Shares”).

“This is an exciting day for HEXO and Redecan employees, investors, consumers and stakeholders,” said HEXO CEO and co-founder Sebastien St-Louis. “The completion of this transaction is aligned with our corporate growth strategy and will further strengthen our position as a leader in the Canadian cannabis industry, bolstering the combined company as we look towards becoming a top three global cannabis products company and continue on the path towards positive EPS.”

In connection with closing of the Transaction, HEXO entered into an investor rights agreement (the “Investor Rights Agreement”) with certain Redecan sellers to provide for certain customary governance rights, including limited demand and piggyback registration rights. A copy of the Investor Rights Agreement will be filed under HEXO’s profile on SEDAR at www.sedar.com. Furthermore, pursuant to the share purchase agreement entered into in connection with the Transaction, resale of the Consideration Shares by Redecan sellers will be restricted by a 24-month hold period during which, subject to certain exceptions, each Redecan sellers will be entitled to sell a maximum of 1/24th of the initial amount of such Redecan seller’s Consideration Shares issued under the Transaction. The Redecan sellers have also agreed to be bound by customary standstill provisions for an 18-month period.

Pursuant to the Transaction and terms of the Investor Rights Agreement, Peter James Montour joins the HEXO board of directors, which also includes Emilio Imbriglio, Vincent Chiara, Jason Ewart, Adam Miron, Michael Munzar, Sébastien St-Louis and Rose Marie Gage. Will Montour will act as non-voting observer on the board of directors, until his election to the board in accordance with the Investor Rights Agreement.

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