Canopy Growth Corp (NYSE: CGC) is flying early on in the market this morning, and for good reason. The company announced that it is the center of a massive investment made by Constellation Brands. Of course, the news of the injected funds excited investors, sending the stock screaming for the top. Today, we’ll talk about:
- The investment;
- what we’re seeing from CGC as a result; and
- what we’ll be watching for ahead.
CGC Receives C$5 Billion Investment
As mentioned above, Canopy Growth is having an incredibly strong start to the trading session this morning after news broke that the company is the center of a 5 billion Canadian dollar investment. In a press release issued early this morning, Constellation Brands, a leading beverage alcohol company, announced a significant expansion in its strategic partnership with CGC to position the company as a global leader in cannabis production, branding, intellectual property and retailing.
In the release, the companies announced that Constellation Brands will acquire new shares at a price of C$48.60 per share, representing a 37.9% premium to Canopy’s 5-day volume weighted average price of common shares on the TSX. The transaction will bring Constellation Brands’ ownership in the stock to approximately 38% assuming exercise of the existing Constellation warrants. The company will also receive additional warrants of CGC that, if exercised, could provide an additional $4.5 billion CAD to the company.
Under the terms of the agreement, Canopy will receive proceeds of C$5 billion immediately upon the closing of the transaction. To date, this investment represents the largest in the cannabis space, giving the company the funds to strategically build and/or acquire key assets needed to establish global scale in about 30 countries that are pursuing federally permissable medical cannabis programs while also laying the foundation for new recreational cannabis markets. In a statement, Rob Sands, CEO at Constellation Brands, had the following to offer:
Through this investment, we are selecting Canopy Growth as our exclusive global cannabis partner… Over the past year, we’ve come to better understand the cannabis market, the tremendous growth opportunity it presents, and Canopy’s market-leading capabilities in this space. We look forward to supporting Canopy as they extend their recognized global leadership position in the medical and recreational cannabis space.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news leads to moves. In the case of Canopy Growth, the news proved to be overwhelmingly positive. After all, the company is going to receive the largest investment seen in this emerging market to date. That’s nothing to shake a stick at! So, it comes as no surprise that excited investors are sending the stock screaming for the top. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (7:49), CGC is trading at $34.17 per share after a gain of $9.55 per share or 38.79% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on CGC. In particular, we’re interested in following the news surrounding this transaction and how the company uses the funds to become a global leader in both the medical and recreational cannabis markets around the world. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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