Constellation Brands’ $5 Billion CAD Investment in Canopy Growth Closes Following Shareholder and Government Approval
Written By: Jen Neville
November 6, 2018
Constellation Brands, Inc. and Canopy Growth Corporation recently announced the closing of Constellation's $5 billion CAD ($4 billion USD) investment in Canopy Growth. The transaction was approved by an overwhelming majority of Canopy Growth shareholders and has been granted all required regulatory approvals, including by the Canadian government under the Investment Canada Act.
This investment provides Canopy Growth with the significant funding needed to build scale in the more than 30 countries currently pursuing federally permissible medical cannabis programs, while establishing the foundation needed to supply new recreational adult-use markets as cannabis becomes legal in markets around the world.
"We're excited to expand our strategic partnership with Canopy Growth and to begin helping them build the global scale needed to win long-term," stated Rob Sands, chief executive officer, Constellation Brands. "The global cannabis market presents a significant growth opportunity and Canopy Growth is well-positioned to establish a strong leadership position in this fast-evolving category."
With this investment, Constellation Brands increases its ownership interest in Canopy Growth to approximately 37 percent of outstanding common shares of Canopy Growth and has appointed two members of its executive team, as well as two independent directors, to the Board of Directors of Canopy Growth. Constellation estimates the interest expense associated with this transaction to approximate $55 million before tax with an approximate $0.25 impact on fiscal 2019 comparable basis EPS results.
Constellation also continues to evaluate the potential equity in earnings impact from the Canopy Growth investment and related items.
"Our cash position opens up a world of opportunity for us," added Bruce Linton, chairman and co-chief executive officer, Canopy Growth. "Relative to our valuation, we have never been in a better position to create shareholder value. This investment was a landmark moment for the entire sector when it was announced. Now that the capital is Canopy's to deploy, we're going to quickly get to work increasing our lead by adding strategic assets around the world."
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