Canopy Growth Corp (NYSE: CGC) is having an incredibly strong start to the trading session this morning, and for good reason. The company announced that it is acquiring a big player in the United States cannabis market.
As you could imagine, the news excited investors who are pushing the stock for the top. Today, we’ll talk about:
- The acquisition;
- what we’re seeing from CGC stock as a result; and
- what we’ll be watching for ahead.
CGC Stock Gains On US Cannabis Acquisition
As mentioned above, Canopy Growth is having a great start to the trading session this morning after announcing a large, United States acquisition. The announcement came by way of press release early this morning.
In the release, the company said that it has entered into a definitive agreement to acquire Acreage. The agreement stipulates that the acquisition will take place at such a time as cannabis production and sale becomes federally legal in the United States.
CGC said that the deal is subject to obtaining the requisite prior approval of shareholders of both Acreage and Canopy, as well as the approval of the Supreme Court of British Columbia.
Following approval, under the terms of the agreement, Acreage Holders will receive an immediate payment of $300 million. In addition, each shareholders will receive 0.5818 common shares of CGC for each voting share of Acreage held at the closing of the transaction.
In the release, the company said that upon exercise of the Right, the total consideration payable under the transaction comes to about $3.4 billion, representing a premium of 41.7% over the 30-day volume weighted average price of Acreage.
The company also said that the two parties will execute a license agreement. This agreement will grant Acreage access to Canopy Growth’s award-winning line-up of brands like Tweed and Tokyo Smoke, along with other intellectual property.
In a statement, Bruce Linton, Chairman and co-CEO at CGC, had the following to offer:
Today we announce a complex transaction with a simple objective. Our right to acquire Acreage secures our entrance strategy into the United States as soon as a federally-permissible pathway exists.
By combining Acreage’s management team, licenses and assets with Canopy Growth’s intellectual property and brands, there will be tremendous value creation for both companies’ shareholders.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that the news leads to moves. When it comes to Canopy Growth, the news proved to be overwhelmingly positive.
After all, it is estimated that once federally legal, the United States will be the largest cannabis market in the world. This acquisition will make the company a major player in this market.
So, it’s not surprising to see that excited investors are pushing the stock on a run for the top. As is just about always the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (9:44), CGC is trading at $45.78 per share after a gain of $2.97 per share or 6.94% 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 story surrounding the company’s continued work to enter into the United States market as well as other 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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