GATINEAU, Que. — An activist investor urged marijuana company Hexo Corp. to launch a review of its strategic alternatives including a possible sale of the company.
In a letter to the company, Riposte praised the work of management at the firm formerly known as Hydropothecary, but noted that its shares trade at a discount compared with its peers.
"We — and, we are confident, other like-minded shareholders — believe your success in establishing enviable assets and contracts for Hexo has not translated to success in earning an appropriate equity price and multiple from the investment community for the company's considerable existing and potential value," Riposte wrote.
Shares in the company were up 52 cents or about nine per cent at $6.41 in trading on the Toronto Stock Exchange on Thursday afternoon.
Riposte Capital said it's Hexo's second largest shareholder.
The New York-based investment firm pointed to Hexo's contract with the SAQ, Quebec's liquor agency, and its joint venture with Molson Coors Brewing Co. as key advantages that are not reflected in its stock price.
It said it believes Hexo's Molson Coors joint venture alone could be worth multiples of its current stock market value.
"That all being said, HEXO still suffers from a low multiple and share price, which is critically important, as it significantly hampers the company in the race for global growth and expansion," Riposte wrote.
Sebastien St-Louis, Hexo's co-founder and chief executive, said the company is keenly focused on building the most value for its shareholders.
"Our management team is continuously evaluating incoming offers and acquisition opportunities with a view to bringing our investors value now and into the future," St-Louis said in a statement.
"We look forward to revealing our plans to move into the international market and to list on a major U.S. stock exchange in the near future."
Companies in this story: (TSX:HEXO)
The Canadian Press