Canopy Growth nears deal to acquire Acreage Holdings
Canopy Growth Corp. is nearing a deal to buy Acreage Holdings Inc. in what would be the first major cross-border cannabis merger, according to people familiar with the matter.
The purchase could be announced as soon as this week, said the people, who asked not to be identified because the discussions are private. Talks are ongoing and may still fall apart, the people said. Canopy’s shares added 9 per cent in post-market trading in New York. Acreage gained 15 per cent in Toronto before the market closed.
The deal would be a major milestone for Canopy, the world’s largest cannabis company, and New York-based Acreage, which boasts former U.S. House Speaker John Boehner and former Canadian Prime Minister Brian Mulroney as directors.
Acreage went public on the Canadian Securities Exchange in November and is now among the largest U.S.-based pot firms. Acreage has cultivation, processing and dispensing licenses or agreements with holders in 19 states. It also manages a chain of retail stores called The Botanist.
Representatives for Smiths Falls, Ontario-based Canopy and Acreage declined to comment.
Canopy also has a high-profile investment from Constellation Brands Inc., the alcohol giant that makes Modelo and Corona beer. Constellation announced in August it was investing about $4 billion into the marijuana company, boosting its existing stake to 37 per cent in a deal that set off a flurry of financial activity in the burgeoning industry. Constellation has the option of taking majority control of Canopy in the future.
One structure Canopy could employ to stay onside with exchange rules is exchangeable shares, or an ownership stake that doesn’t become active until federal prohibition is lifted. There’s a precedent for such an arrangement with Canopy’s stake in TerrAscend Corp., which has cannabis operations in the U.S. Those shares can’t be transferred or monetized and aren’t entitled to voting rights or dividends, but can be converted into common shares if U.S. federal law changes.
Canopy has been one of the top performing stocks in Canada this year, surging 56 per cent and boosting its market value to $19.6 billion (Canadian).