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Canaccord Genuity Group Inc (TSE:CF) Analyst Matt Bottomley on Cannabis M&A Activity
Canaccord Genuity Group Inc (TSE:CF) (OTCMKTS:CCORF) (FRA:C6U) Analyst Matt Bottomley shares his thoughts on recent M&A activity in the cannabis space. Bottomley breaks down HEXO Corp’s (TSE:HEXO) (NYSE-A:HEXO) (FRA:74H) announced acquisition of Newstrike Brands Ltd (CVE:HIP) (OTCMKTS:NWKRF) (FRA:0N8). He emphasizes that the deal provides HEXO with indoor cultivation, which is necessary to export to Europe, but provided no premium to Newstrike. This represents a significant issue for Tier 2 names, which might have to take smaller deals to grow with bigger names. Bottomley thinks MSOs are the best play for 2019 and believes that while Canadian LPs have greater international optionality, the global industry is a longer term play with more risk. Bottomley is not surprised Nelson Peltz’s deal with Aurora Cannabis Inc (TSE:ACB) (NYSE:ACB) (FRA:21P) sent the company’s stock soaring. Bottomley believes Peltz’s value as a strategic investor will be realized once the US cannabis market opens to international players.