(Bloomberg) -- Two Canadian marijuana companies are joining forces as the nation gets set to legalize pot. Investors cheered, taking the acquiring company’s stock to new highs.
DOJA Cannabis Co. has entered into a letter of intent to buy all the issued and outstanding shares of closely held Tokyo Smoke, which has six coffee and cannabis-accessory shops, the companies said Thursday in a statement. DOJA’s stock surged as much as 29 percent in Toronto trading.
Canadian marijuana companies are jockeying for advantage in production, marketing and branding as the nation marches toward legalization by July. The combined DOJA-Tokyo Smoke company will be renamed Hiku Brands and will offer marijuana-related products across Canada from companies including DOJA and Van der Pop.
“We have created the first leading brand house in cannabis,” DOJA Chief Executive Officer Trent Kitsch said in the statement. “I am confident Hiku will be trusted by consumers to design better customer experiences and products, resulting in greater market share.”
DOJA is in the process of building a new production facility in Kelowna, British Columbia, and operates the Culture Cafe, which also serves as a cannabis information center “that generates brand awareness,” according to the statement. The companies also announced a $12.5 million financing deal led by Aphria Inc., which is making a $10 million equity investment in Hiku.
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