Canopy Growth Takes 19.99% Stake In Indiva As Part Of Wana Licensing Deal
Despite the downturn in the cannabis market, Canopy Growth (TSX: WEED) is working to stop the bleed of its market share. The firm this morning revealed a transaction that will see it take control of the Wana brand across North America.
Canopy Growth has reached a deal with Indiva Limited (TSXV: NDVA) that will see it license the Wana brand in Canada. The transaction will provide Canopy with the exclusive rights to manufacture, distribute, and sell the brand. A contract manufacturing arrangement has also been entered into, which will see Indiva have the exclusive rights to manufacture and supply Wana branded products for a period of five years, with a five year extension option.
“Collectively, these agreements provide Canopy Growth more complete ownership over the value chain for the Wana brand in Canada, while ensuring continuity of high-quality manufacturing and consistency with Canopy’s asset-light production strategy,” commented Canopy CEO David Klein.
The terms of the transaction will see Canopy Growth take a 19.99% stake in Indiva, subscribing for 37.23 million common shares of the company at a price of $0.0579, for gross proceeds of $2.2 million. Additional consideration includes $844,383, as well as a cash payment of $1.25 million to be paid in May 2024.
As part of the investment, Canopy will have the right to nominate an individual to the board of Indiva.
“We expect this arrangement to be immediately accretive to Canopy Growth’s EBITDA, and we look forward to partnering with Indiva to further bolster Wana’s position as a leading edible brand in Canada,” concluded Klein.
Proceeds from the financing are said to be used by Indiva to settle obligations under its license for Wana, and for costs and expenses related to manufacturing and supply the branded products.
The transaction is slated to close on June 6.
Canopy Growth last traded at $1.23 on the TSX.
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As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.
