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by Mike Caswell
Hexo Corp.'s takeover of Zenabis Global Inc. has landed in the Supreme Court of British Columbia, with Zenabis's former chairman filing a lawsuit over the $235-million deal. He claims that Hexo failed to make full disclosure ahead of the transaction. In particular, it did not tell anybody that it intended to immediately raise $360-million (U.S.) after closing the takeover, the suit states.
The allegations are contained in a lawsuit filed on June 1, 2023, at the Vancouver courthouse. The suit was filed by Daniel Burns, who was Zenabis's chairman until the takeover closed. He negotiated the takeover, with the all-share deal resulting in Zenabis shareholders receiving 0.01772 of Hexo share for each share that they held.
The takeover, as set out in the suit, arose in early 2021. After a period of negotiations, Hexo and Zenabis formalized the transaction with an agreement dated Feb. 16, 2021. The deal later received approval from Zenabis's shareholders, who voted in favour of the transaction at a May 13, 2021, special meeting.
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