Market Overview

Canopy Growth To Buy Acreage Holdings In $3.4B Deal

Canopy Growth To Buy Acreage Holdings In $3.4B Deal

Canopy Growth Corp (NYSE: CGC) continued to trade higher Thursday morning following a late Wednesday report on its interest in Acreage Holdings Inc (OTC: ACRGF).

Editor's note: On Thursday morning just ahead of the opening bell, Canopy Growth confirmed it will buy Acreage Holdings for an upfront payment $300 million, or $2.55 per Acreage subordinate voting share. The total value of the deal could be worth up to $3.4 billion.

What Happened

According to Bloomberg, Canada’s Canopy Growth is in ongoing talks with Acreage, the New York-based pot company where former U.S. Speaker of the House John Boehner and former Canadian Prime Minister Brian Mulroney serve as directors.

Two weeks of discussions were expected to culminate in a Wednesday night call to finalize a deal, according to CNBC.

Why It’s Important

Bloomberg noted the agreement would be the “first major cross-border cannabis merger.” Acreage is one of the largest U.S. cannabis companies, with a national chain of retail stores and cultivation, processing and dispensing arrangements in 19 states.

The sale would position also Canopy to penetrate the significant but yet-inaccessible U.S. market. The Canadian company has had trouble maneuvering around U.S. restrictions to merge or invest in American cannabis ventures.

A shoe in with Acreage would accelerate the growth of one of Canada’s best-performing stocks. In the last few weeks alone, Canopy has tagged AgriNextUSA; Spanish producer Cafina; and most recently Deep Roots Medical. CNBC reported Canopy has been eyeing other U.S. companies, as well.

What’s Next

The acquisition may be announced as early as this week, according to Bloomberg. To remain in compliance with U.S. regulations, Canopy could pursue the transaction with exchangeable shares, which would reserve an ownership stake contingent on the lifting of federal pot prohibitions.

Canopy Growth's stock traded about 4.4 percent higher at $44.75 per share Thursday morning.

Related Links:

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Canopy Growth Soars On Unexpected Guidance Update, European Acquisition


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