The Hydroponics Company Ltd.’s (ASX: THC) stock moved up by 1.117% on January 24, 2018 on the acquisition news that is expected to deliver broader product offering for the group’s Canadian cannabis business.

The group has not revealed the name of the company under consideration but has signalled that the move is expected to strengthen the group’s overseas operations. Further, an exposure to the rapidly growing licenced producers in the eastern states of Canada can prove beneficial for the group.

It is worth noting that the acquisition target looks complementary to the existing Crystal Mountain-Dragon Vision business that has added value to group’s portfolio. THC expects that the target is capable of generating annual revenues in excess of C$20 million, and thus carries a significant worth for the group. Further, THC can thereafter offer an extensive range of products for the Canadian cannabis market. The acquisition is said to get completed in April 2018 subject to meeting other requirements. As of now, THC has appointed professional firms to conduct due diligence.

The overall picture with favourable regulatory regime in Australia and group’s efforts to leverage the scenario, is expected to provide an uplift. Meanwhile, THC aims to keep on exploring acquisitive as well as organic opportunities to drive further growth. While the sector volatility prevails, the group-level potential seems to be significant. We give a “Hold” on THC (up 244% in last six months) at the current price of $0.905

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