Constellation ups stake in Canopy Growth
US drinks firm Constellation Brands has purchased an additional 5.1% stake in cannabis company Canopy Growth Corporation for CA$245 million (US$173m).
Canopy Growth has received billions of dollars in investment from Svedka vodka owner Constellation Brands since 2017. Constellation Brands’ total ownership in the Canadian cannabis company now sits at 38.5%.
In a statement on Friday (1 May), Constellation Brands exercised its right to purchase a total of 18,876,901 common shares in Canopy Growth at a per-share price of approximately CA$12.98 (US$9.2).
Constellation Brands also has further warrants and senior notes that, if changed and exercised, would take its ownership in Canopy Growth to around 55.8%.
“While global legalisation of cannabis is still in its infancy, we continue to believe the long-term opportunity in this evolving market is substantial,” said Bill Newlands, president and CEO of Constellation Brands.
“Canopy is best positioned to win in the emerging cannabis space and we are confident in the strategic direction of the company under David Klein and his team.”
David Klein, Canopy Growth CEO, added: “This additional investment validates the work our team has done since attracting the initial investment in 2017. It also strengthens our ability to pursue the immense market and product opportunities available to Canopy in Canada, the US and other key global markets.”
Last month, Constellation Brands said Canopy Growth’s equity earnings and related activities for the fourth quarter of fiscal 2020 equalled a loss of US$31.7m.
In March 2020, the cannabis maker expects to record an estimated pre-tax loss of around CA$700m to CA$800m (US$496-US$567) in the fourth quarter of fiscal 2020 due to the closure of Canadian greenhouse facilities, as well as other changes related to its organisational and strategic review.
On 16 April, Canopy Growth announced a number of changes to its global operations, including cutting its workforce by 85 full-time jobs.
Canopy Growth said it planned to exit its operations in South Africa and Lesotho, close its Canadian site in Yorkton, stop work at its cultivation facility in Colombia and shut its farming business in Springfield, New York.
The changes were announced as part of an ongoing strategic review of the business as it seeks to “further optimise production, better align supply and demand, and improve efficiencies in its global operations”.