Canopy Growth, one of the world’s largest cannabis producers, announced Thursday the purchase of one of its main rivals, Supreme Cannabis, in a deal valued at $ 345.6 million (CA$435 million), to consolidate its position in Canada.
In this country, recreational cannabis consumption has been legal since the end of 2018.
The acquisition will mean that Supreme Cannabis shareholders will receive for each of their shares 0.0116 Canopy Growth shares and $0.0001, which is 66% more than the closing value of the shares on April 7th.
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Canopy Growth said in a statement that the transaction will benefit both companies.
Thus, on the one hand, “Canopy will own a strengthened range of brands including one of Canada’s leading high-end brands, 7ACRES.” On the other hand, “Supreme Cannabis shareholders will benefit from Canopy’s CBD (cannabidiol) business in the United States,” the note added.
The CBD sector, a compound from hemp and cannabis plants that is increasingly used as a dietary supplement, is experiencing rapid growth in the U.S. since the legalization of cannabidiol in 2018.
In addition to cannabis, Canopy has products in the health and nutrition sectors in Canada, the U.S. and Europe through the BioSteel brand.
The purchase of Supreme Cannabis also provides Canopy Growth with a new source of low-cost cannabis, thanks to the company’s hybrid greenhouse in the Canadian town of Kincardine that “has demonstrated the ability to consistently produce high-quality flower of high-demand strains at a low cost and with significant growth potential.”
David Klein, Canopy’s CEO, welcomed the fact that the company will reach more consumers with Supreme’s high-end brands and high-quality products, which will strengthen its leadership.
For her part, Beena Goldenberg, the president of Supreme Cannabis, stressed that this transaction will be beneficial for all stakeholders of the company.
The deal has to be approved by the courts as well as by two-thirds of the votes cast by Supreme’s shareholders at a special shareholders’ meeting to be held in June this year.
(Featured image by PublicDomainPictures via Pixabay)
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