Canopy Growth Finally Exercises Option To Acquire Acreage Holdings

Tuesday, June 4, 2024, 08:55:08 AM

Acreage Holdings (CSE: ACRG.A.U) is set to finally be acquired by Canopy Growth (TSX: WEED). Canopy reported this morning that it has exercised the option to acquire the multi-state cannabis operator, after years of delay due to the status of cannabis at the federal level in the US.

Canopy Growth’s subsidiary Canopy USA is to acquire the Class E subordinate voting shares, as well as the Class D subordinate voting shares, which collectively are referred to as the “fixed” and “floating” shares in what became a convoluted share structure. Canopy Growth meanwhile will obtain certain outstanding debt of Acreage in connection with the exercise of the option agreement.

That debt agreement will see Canopy purchase US$99.8 million of Acreage’s debt in exchange for US$69.8 million in cash and the release of US$30.1 million that was held in escrow in relation to the option agreement. Canopy also obtained a call right over US$45.6 million in Acreage debt that remains outstanding.

READ: Acreage Holdings Posts Negative Gross Margins In Q1 2024

“These are major steps forward and consistent with the strategy outlined by Canopy Growth to allow our shareholders to benefit from our ownership of non-voting shares in Canopy USA, and we’re excited to see this advancing as more of Canopy USA’s priority markets come online for adult use across the Midwest and Northeast,” commented David Klein, CEO of Canopy.

The exercise of the option follows Canopy USA closing on the acquisition of Wana Wellness, CIMA Group, and 77% of Jetty, all of which closed May 31. The acquisition of Mountain High Products meanwhile is ongoing, and is expected to close in the first half of fiscal 2025.

Canopy Growth last traded at $10.93 on the TSX.

Information for this briefing was found via Sedar and the sources and companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.