Canadian cannabis company Tilray Inc. (TLRY) announced that it was acquiring FHF Holdings Ltd., the parent company of hemp-food maker Manitoba Harvest 1/, from a U.S. private-equity firm for up to C$419 million ($315 million) in cash and stock.

Tilray will pay C$277.5 million at closing, comprised of C$150 million in cash and C$127.5 million in Tilray Shares. Six months after closing, Tilray will pay C$92.5 million, comprised of C$50 million in cash and C$42.5 million in Tilray Shares. Additionally, the Company will issue an additional C$49 million in Tilray shares based on Manitoba Harvest achieving certain performance milestones in 2019.

Apparently, TLRY is paying big money to buy brand names in the marijuana and hemp-food producers categories. Whether the price is justified cannot be determined since no national brands exist and local brands may not be able to make the transaction to wider markets. The acquisition is a classic example of buying the "sizzle" not the steak. What TLRY got right is the categories. We estimate the marijuana and hemp-food producers categories could be worth more than US$25 billion by 2022.

Tilray CEO Brendan Kennedy said in a statement. "Our acquisition of Manitoba Harvest is a milestone for the cannabis industry. It builds on the strategic partnerships we have formed with consumer brand industry leaders and demonstrates our track record of disrupting the global pharmaceutical, alcohol, CPG, and functional food and beverage categories, We're excited to work with Manitoba Harvest to develop and distribute a diverse portfolio of branded hemp-derived CBD food and wellness products in the U.S. and Canada."

1/ Manitoba Harvest has a portfolio of hemp-derived foods including Hemp Harts, Hemp Oil, Hemp Yeah! Granola, Hemp Yeah! Protein Powder, and Hemp Bliss Milk.