Canopy to acquire remaining 33.33% of BC Tweet for $374M

Canopy Growth Corporation (TSX: WEED) has entered into a non-binding agreement to purchase the remaining 33.33% stake of BC Tweed Joint Venture Inc. not currently owned from Victor Krahn, the owner SunSelect Produce, for up to $374 million.

Payments, in Canopy shares, are milestone-based and will be released over four years based upon the achievement of certain production milestones.

On October 10, 2017, Canoy entered into a definitive joint venture agreement with SunSelect to formBC Tweed Joint Venture Inc. SunSelect has the option to sell its interest in BC Tweed, in whole or in part, in exchange for shares in Canopy equal to the fair value of their interest in BC Tweed on that date.

SunSelect will continue to manage the BC-based operations for a period of 5 years.

Canopy will issue $20 million worth of common shares in connection with an option to acquire certain future infrastructure from SunSelect, subject to certain conditions.

photo credit: BC Tweed Joint Venture

News Release

CANOPY GROWTH ENTERS AGREEMENT TO ACQUIRE OUTSTANDING SHARES IN BC TWEED JOINT VENTURE

MAY 14, 2018

SMITHS FALLS, ON – Canopy Growth Corporation (“Canopy Growth” or the “Company”) (TSX: WEED) is pleased to announce that it has entered into a non-binding agreement (the “Agreement”) to purchase, subject to certain conditions, the remaining 33% stake of BC Tweed Joint Venture Inc. (“BC Tweed”) not currently owned by the Company. The consolidation of the two largest licensed cannabis facilities in the world into full Canopy Growth ownership cements the Company’s commitment to shareholder value through scale production.

Canopy Growth, upon closing of the transaction, will issue up to $374 million worth of shares in the Company, subject to the satisfaction of certain conditions, to the minority shareholders of BC Tweed (the “Operators”). Payments are milestone-based and will be released over four years based upon the achievement of certain production milestones. The Operators, multi-generational cultivators, will continue to manage the BC-based operations for a period of 5 years.

The BC Tweed greenhouses represent a meaningful share of the entire Canadian production landscape with up to 3 million square feet of greenhouse growing capacity. Since the formation of BC Tweed in October of 2017, already over 1.7 million square feet has been licensed for production to meet to oncoming recreational cannabis demand across the country.

“Our provincial distribution agreements, commitment to quality and value-add processing, and leading brand portfolio position Canopy Growth as the market share leader in Canada’s future recreational cannabis market,” said Bruce Linton, Chairman & CEO, Canopy Growth. “Consolidating BC Tweed fully under the Canopy ensures that the full value of our strategic position is realized by Canopy shareholders.”

Under the terms of the Agreement, subject to approval of the Toronto Stock Exchange and certain other conditions, the Company will issue $374 million worth of common shares in the capital of the Company based on the volume weighted average price per common share for the 20 trading day period ended May 11, 2018 (the “VWAP”). The Company will also pay $1 million in cash as a non-refundable deposit against the purchase price. In addition, the Company will issue $20 million worth of common shares in the capital of the Company at the same VWAP in connection with an option to acquire certain future infrastructure from the Operators, subject to certain conditions. The transaction is anticipated to close in early July, following the negotiation of definitive agreements.

All amounts are in Canadian dollars.

Here’s to Future (BC Bud) Growth.

Contact:
Jordan Sinclair
Vice President, Communications & Media
Jordan@canopygrowth.com
613-769-4196

Investor Relations:
Tyler Burns
Tyler.burns@canopygrowth.com
855-558-9333 ex 122

Director:
Bruce Linton
tmx@canopygrowth.com

About Canopy Growth Corporation
Canopy Growth is a world-leading diversified cannabis and hemp company, offering distinct brands and curated cannabis varieties in dried, oil and Softgel capsule forms. From product and process innovation to market execution, Canopy Growth is driven by a passion for leadership and a commitment to building a world-class cannabis company one product, site and country at a time.

Canopy Growth has established partnerships with leading sector names including cannabis icons Snoop Dogg and Organa Brands, breeding legends DNA Genetics and Green House seeds, and Fortune 500 alcohol leader Constellation Brands. Canopy Growth operates eight cannabis production sites with over 2.4 million square feet of production capacity, including over 500,000 square feet of GMP-certified production space. The Company has operations in seven countries across four continents. The Company is proudly dedicated to educating healthcare practitioners, conducting robust clinical research, and furthering the public’s understanding of cannabis, and through its partly owned subsidiary, Canopy Health Innovations, has devoted millions of dollars toward cutting edge, commercializable research and IP development. Through partly owned subsidiary Canopy Rivers Corporation, the Company is providing resources and investment to new market entrants and building a portfolio of stable investments in the sector. From our historic public listing to our continued international expansion, pride in advancing shareholder value through leadership is engrained in all we do at Canopy Growth.


Ted Liu
Ted Liu, M.Sc. (Mining), MBA (Finance), is the Editor of Private Capital Journal, TechnologyMetals.ca, GoldSilverMetals.ca, and former Editor of Canadian Private Equity. Ted has been passionately tracking Canadian private capital industry since 1992, most recently served as Research Director for The Canadian Venture Capital and Private Equity Association (CVCA). Ted is President of CPE Media Inc., an independent, trusted and unbiased data provider tracking Canadian VC/PE, private capital industry.
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