Constellation has gradually increased its grip over the Canadian cannabis company
Alcohol giant Constellation Brands exercised warrants to acquire $174 million (C$245 million) worth of Canopy Growth shares in a move that further cemented the alcohol giant’s commitment to cannabis.
“While global legalization of cannabis is still in its infancy, we continue to believe the long-term opportunity in this evolving market is substantial,” Constellation President and CEO Bill Newlands said in a statement. “Canopy is best positioned to win in the emerging cannabis space and we are confident in the strategic direction of the company under David Klein and his team.
“Per terms of the deal, Constellation ($STZ) exercised about 19 million warrants to purchase about 5 percent of outstanding shares of Canopy ($CGC) at roughly $9.23 (C$13) per share. It’s a significant discount for Constellation, which invested some $4 billion when shares were trading around $32 back in August 2018. In spite of the discount, securing substantial funding in the middle of a pandemic after a devastating year for the cannabis industry is a major vote of confidence, not only for Canopy but for the industry as a whole.
“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 U.S. and other key global markets,” David Klein, Constellation veteran and Canopy Growth CEO, said in a statement.
Constellation has gradually increased its grip over the Canadian cannabis company since it first invested in 2017. Both CFO Mike Lee and Klein, who took the reins in January, are Constellation veterans. Under Klein’s leadership the company has undertaken significant cost-cutting measures that analysts say position the company well for longevity.
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