Associated Press
- Cronos announced Friday that it has agreed to buy Redwood Holding Group, a hemp producer which distributes CBD products in the US, for $300 million.
- Cronos shares rose on the news.
- The deal shows that the Canadian cannabis company is making good on its plan to enter the US CBD market soon.
- Watch Cronos trade live on Markets Insider.
Cronos Group shares got a boost Friday from news of an acquisition that would position the company to take advantage of the US CBD market.
Shares of the Canadian cannabis company jumped as much as 5.5% on news that it has agreed to acquire Redwood Holding Group, a retailer of CBD-infused products including bath salts and body lotion. The deal is worth about $300 million and is expected to close in Q3, according to a press release.
Redwood makes and distributes CBD products derived from hemp under the brand name Lord Jones and through US retailers.
"Rob and Cindy have built a differentiated, best-in-class platform with hemp-based CBD formulations that stand for quality and consistency," said Mike Gorenstein, the CEO of Cronos, referring to Redwood founders Robert Rosenheck and Cindy Capobianco.
"Our goal is to preserve the integrity of all Rob and Cindy have created, while also learning from them and leveraging Cronos Group's resources to capitalize on the significant demand for skincare and other consumer products derived from hemp."
The deal shows that Cronos is making good on its plan to enter the US CBD market in the next six to 12 months. The stakes are high for any cannabis company - cannabidiol, or CBD, is currently a $1 billion market in the US. In addition, the potential for growth is vast - analysts think the market could balloon to be as much as $16 billion by 2025.
Cronos has been on a dealmaking spree over the last few months. It recently announced an agreement to purchase a state-of-the-art fermentation and manufacturing facility from Apotex Fermentation in Canada. Cronos also has a partnership with Altria Group, a large tobacco producer and marketer, which will help it source hemp in the US.
Shares of Cronos are up more than 18% year-to-date.
