The chief executive officer (CEO) of Canadian cannabis producer Hexo (NASDAQ:HEXO) abruptly resigned from the company he co-founded after an activist investor sent a letter to the board criticizing his performance.
Hexo CEO Sebastien St-Louis quit after activist shareholder Adam Arviv delivered a letter to the board demanding significant changes due to concerns including, "recent dilutive financings, the CEO's misalignment with shareholders, and a lack of basic business skills to lead."
Arviv was an advisor to the family behind Redecan, a privately-held cannabis company that Hexo agreed to acquire in May for $935 million in cash and stock. Arviv also co-founded Ohio-based cannabis cultivator and retailer Green Growth Brands, and BRN Group, a cannabis consulting company.
Hexo shares have plunged more than 75% since the company announced its deal to acquire Redecan on May 28. The stock fell sharply in late August, following Hexo's announcement of plans for a $140 million U.S. underwritten public offering. The company's deal to acquire Redecan closed on August 30 of this year.
St-Louis' immediate departure was announced as part of a strategic reorganization of Hexo. The Ottawa-based company did not name a successor. Donald Courtney, Hexo's chief operating officer, will also leave the company, according to a news release.
In a bid to scale the company, St-Louis has led Hexo through a series of cannabis acquisitions in recent months, striking deals to purchase Zenabis Global, 48 North and Redecan. Hexo said it's in advanced discussions with CEO candidates and expects to make an announcement in the coming days.
Canada's legal cannabis industry has seen a revolving door of senior executives. Most major players have shaken up their senior ranks in recent years as the industry struggles against a litany of headwinds, from oversupply to a persistent black market.
Hexo stock fell 2.79% on news of the CEO departure to $2.09 per share.
