Following the approval of Canopy Growth and Acreage shareholders and the Supreme Court of British Columbia under the Agreement of Agreement (" The Agreement "), Acreage Holders (as defined below) will receive one immediate aggregate total of US $ 300 million or about US $ 2.55 per corporation subordinate voting agreement () based on currently outstanding subordinate voting rights and conversion of certain convertible securities described below. In addition, in exercising the Right, holders of subordinate voting shares in Acreage (" Shares Subordinate Voting Rights ") will receive 0.581
The companies will also make a license agreement that provides access to Canopy Growth's award-winning range of brands such as Tweed and Tokyo Smoke, along with other intellectual property. When exercised by the Court, Acreage will become part of a leading global cannabis company with access to markets outside the US. Until then, the two companies will continue to operate independently.
"Today, we announce a complicated transaction with a single goal. Our right to acquire Acreage secures our entry strategy to the United States as soon as a federal permissible road exists," Bruce Linton Chairman and CEO , Canopy Growth "By combining Acreage's management team, licenses and assets with Canopy Growth's intangible assets and brands, there will be tremendous value creation for both company shareholders."
"From the first day, we created our company and offer exceptional customer care and delivery The shareholder value has been our top priority. This transaction will help achieve both, says Acreage Holdings, CEO and President Kevin Murphy . "When exercising the right of access to Canopy Growth's deep resources, we will be able to innovate, develop, and distribute quality ideas in the United States, and continue to expand our US footprint. At the same time, there is a mix of factors that make it much more difficult for a multistatist Operator to achieve its full potential, including the tremendous amount of cash required to scale.Our board, management team and I are happy to deliver significantly increased liquidity to our shareholders and put us in an even stronger position to deliver continued and significant upside. "
When exercising the right, the combined infrastructure, intangible assets, brands and organizational resources are expected to create a global cannabis power plant with an expected leadership position in each targeted international market for legal cannabis sales, including the United States, Canada . and select markets over Latin America Europe and Asia-Pacific .
- Canopy Growth achieved national visibility in USA when listing its common stock on the New York Stock Exchange, and became the first cannabis company to do so. Canopy Growth's US hemp operations are established in parallel with the Acreage entry strategy and will include hemp cultivation, extraction, processing and packaging products for sale over USA where permitted by regulation.
- Acreage is a leading multi-state operator in American cannabis. It owns or has clear agreements for cannabis-related licenses across 20 states (entitling to develop), including 87 dispensers and 22 cultivation and treatment sites. The Board includes former Canadian Prime Minister Brian Mulroney and former US House Representative, John Boehner .
- In the exercise of the Court, the combined operations of land and sky growth will immediately create the undisputed leader of American cannabis, the only relevant market in which Canopy Growth does not yet have a large presence.
- According to the event, Acreage will be able to issue up to 58,000,000 shares of subordinate voting rights (implied valuation of [$ $ 1.4 billion based on Canopy's stock exchange closing price) along with an additional 5,221,905 Area Subordinate voting rights in connection with certain potential acquisitions, which if Right is exercised, will be future Canopy shares, which, in combination with the expectation of increased liquidity, will further accelerate Acreage's ability to finance ecologically and accretively rapid expansion.
- Canopy Growth and Constellation Brands, Inc. ("Constellation Brands") – Canopy Growth's largest shareholder and Fortune 500 beverage alcohol retailer – as part of the event, extend the terms of certain warrants and restructure other rights. See Constellation's press release dated April 18, 2019 "Constellation Brands is entering into an agreement with Canopy Growth Corporation to change warrants and other rights".
- Acreage President, George Allen will resign the company effectively immediately. Chairman and CEO Kevin Murphy will assume the president's duties.
Way More Detail
The transaction will be carried out at a court-settled plan for events under Business Law ( British Columbia ) (" Arrangement " ) and will require the approval of shareholders of both Canopy Growth and Acreage at special meetings expected to take place in June 2019 . In addition to the approval of shareholders, the Transaction is subject to applicable regulations, legal and stock exchange approvals and certain other final terms.
Under the terms of the transaction, the limited companies may subordinate voting rights, which may be acquired securities holders of proportional voting shares in the stock (" corporation voting rights "), holders of several voting shares of Acreage (" Acreage Multiple Voting Shares ") and unit holders (" Acreage Unit Holders ") in High Street Capital Partners, LLC and shares in Acreage Holdings WC, Inc. ("USCo2 Holders"), whether conversion or exchange of these, as applicable, will be subject to the Court and entitled to Premium Cash Premium.
Under the agreement, Canopy Growth will pay -Front Cash Premium to the holders of joint-stock voting rights, joint-stock voting rights and shares for multiple voting, and stockholders and USCo2 holders (collectively, " landowners "). There will be a cash premium paid to the Shareholders based on the current outstanding securities in Acreage.
After the federal legalization of cannabis in USA (" Triggering Event ") and certain other conditions to close, each corporation vote share and share multiple votes vote will be automatically converted to Acreage Subordinate Voting Shares according to their terms and conditions and then each share-subscribed voting share will be automatically exchanged for Canopy shares based on the Exchange Ratio. Upon entering into the transaction, shareholders will be entitled to convert their units, and USCo2 Holders will be entitled to convert their shares into Canopy Shares based on Exchange Ratio. The shareholders will be required to convert to Canopy shares three years after the transaction has ended. If the triggering event is not met or waived within 90 months of payment of the Cash Prize in front, the agreement will terminate.
Having given effect to the Transaction, provided that conversion of all securities in Areal after a triggering event, Acreage Holders will hold approximately 12.1% ownership in Canopy Growth (on a pro forma basis) and up to 16.6% if allowed Acquisitions are completed before the Trigger Event. Under the Transaction, it is permitted to issue an additional 58,000,000 shares of subordinate voting rights (or the equivalent number of convertible securities) with an additional 5,221,905 shares of subordinate voting rights (or equivalent number of convertible securities) under
Constellation Brands Changes
Implementation of the Transaction is subject to the approval of the holders of Canopy Shares by the issue of the Canopy Shares in accordance with the Transaction and certain changes to existing subscription rights held by a subsidiary of Constellation Brands. Due to the scope of the proposed transaction, Canopy Growth and Constellation Brands have changed the investor rights agreement as described here:
- Extension of the expiration date of certain subscription rights held by Constellation Brands: In addition to the 18.9 million warrants attached to November 2017 Canopy Investment, Constellation currently has 139.7 million warrants in Canopy, which after shareholder approval could be exercised over a period of five to eight years from on November 1, 2018 compared to the previous three-year period. This includes 88.5 million Tranche A subscription rights, which can be exercised at a price per share of C $ 50.40 and 51.2 million Tranche B warrants, of which 38.4 million or 75 percent may exercised at a price per share of C $ 76.68 . The remaining 25 percent of the original Tranche B subscription rights will be Tranche C subscription rights and may be exercised at Cany's five-day volume-weighted average price for the common stock of the Toronto Stock Exchange ("VWAP") immediately prior to the training. If Canopy exercises its right to acquire the shares in Areal and Constellation, they should exercise all of their outstanding Canopy subscription rights, Constellation's ownership of Canopy is not expected to exceed 50 percent.
- If the Constellation fully exercises Tranche A subscription rights, Canopy has undertaken to repurchase the minimum of 25 percent of its issued Shares to Acreage or a dollar amount equivalent to 25 percent of the implied business value of Areal within 24 months of the date of Constellation is guaranteed exercise.
- Constellation will be allowed to purchase up to 20 million Canopy shares in the open market before the warrant is exercised or terminated, provided that for each share purchased by Constellation, the number of Tranche B subscription rights is reduced by one.
- Constellation will continue to maintain its current level of representation on Canopy's board.
With these changes, Constellation continues to use the cash flow to generate returns for its shareholders, while Canopy Growth continues to distribute USD $ 4 billion investment made by Constellation in November 2018 .
Acquisition Management Recommendation
Acreage's Board of Directors (" Acreage Board ]"), by unanimous recommendation of a separate Committee of Independent Directors of Acreage ("Specialized") has unanimously approved the Transaction and recommends that the shareholders in Areal vote for the resolution approving the Transaction.
The Action Board and the Special Committee have obtained a fairness statement from each of Canaccord Genuity Corp and INFOR Financial Inc., which, from the date of the respective opinions, and subject to the assumptions, limitations and qualifications upon which such opinions are based, the consideration provided by Acreage Holders shall receive, in accordance with the Transaction, fair, from a financial point of view to the limited liability companies.
Shareholder approval of shares
The transaction requires the approval of at least 66 thirds of the holders of the Shareholders' subordinate voting rights, shareholder voting rights and Shares more voting rights. In addition, the transaction requires multilateral instrument 61-101 – Protection of minority security holders in special transactions approval of at least a majority of uninterested holders of the limited liability companies subordinate to voting shares, proportional voting shares and area Multiple voting shares, each voting separately as a class.
Certain board members and officers have entered into voting and support agreements according to which they have, among other things, agreed to vote for the transaction. Acreage's directors and officers have also entered into certain lock-up agreements regarding their current share capital holdings.
Canopy Board Recommendation
Greenhill & Co. Canada Ltd. ("Greenhill") served as financial advisor to Canopy Growth and provided an independent justice to the Canopy Growth Board ("Canopy Board") that the Exchange Ratio payable under the Transaction is reasonable, from an economic point of view to Canopy Growth. Upon receiving fairness opinion from Greenhill the Transaction and the amendments were unanimously approved by the Canopy Board, except for directors who abstained from voting on the transactions as a result of the changes. All board members support the transaction and the changes.
Canopy Shareholder Approval
The issue of the Canopy shares in connection with the Transaction and some of the changes will require the approval of a single majority of the uninterested shareholders of Canopy Growth, presented at a special meeting (" Canopy Meeting ").
Additional Transaction Terms
The transaction is, among other things, subject to approval by the CSE, the Toronto Stock Exchange and the New York Stock Exchange, the Supreme Court British Columbia and certain other regulatory approvals and closures. The agreement includes representations, warranties and covenants, including a termination fee of US $ 150 million paid by Acreage in the event the transaction is terminated under certain circumstances. The agreement also contains certain non-solicitation conditions that are subject to a declaration of assurance to accept a parent proposal under certain circumstances, with Canopy Growth having five business days entitled to match such a superior proposal received by Acreage.
Further details on the Transaction and the Amendments will be given to shareholders of Canopy Growth and Acreage in information circulars to be sent to the shareholders.
Cassels Brock & Blackwell LLP and Paul Hastings LLP served as a lawyer for Canopy Growth. PricewaterhouseCoopers LLP ( Canada ) served as financial advisor to Canopy Growth. Ernst & Young LLP (EY) acted as tax advisor to Canopy Growth. DLA Piper ( Canada ) LLP and Cozen O & # 39; Connor acted as a lawyer to Acreage. Canaccord Genuity Corp. Served as financial advisor for Acreage and INFOR Financial Inc. acted as financial advisor to the special committee for land. Canaccord Genuity Corp and INFOR Financial Inc. gave a fair opinion to the Acquisition Board and the Acreage Special Committee respectively. Stikeman Elliott LLP served as legal advisor to the area commission.
About Canopy Growth
Canopy Growth is a world-leading, diversified cannabis and hemp company, offering various brands and curated cannabis varieties in dried, oil and softgel capsule forms. Canopy Growth offers medically approved vaporizers through its subsidiary Storz & Bickel GMbH & Co. KG. 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, place and country at a time. Canopy Growth has operations in over a dozen countries on five continents.
Canopy Growth is proudly dedicated to educating healthcare professionals, conducting robust clinical research and promoting public understanding of cannabis, and through its wholly-owned subsidiary Canopy Health Innovations, has devoted millions of dollars to pioneering, commercializable research and IP development. Canopy Growth works with the Beckley Foundation and has launched Beckley Canopy Therapeutics to investigate and develop clinically-approved cannabis-based drugs, with a strong focus on intellectual property protection. Canopy Growth acquired assets of leading hemp research company, Ebbu, Inc. ("EBBU"). Intellectual Property ("IP") and R&D Progress achieved by Ebb's team apply directly to Canopy Growth's hemp and THC-rich cannabis genetic breeding program and its cannabis-infused drinking options. Through partly owned subsidiary Canopy Rivers Inc., Canopy Growth offers resources and investments to new market participants and builds a portfolio of stable investments in the sector.
From our historic listing on the Toronto Stock Exchange and the New York Stock Exchange to Our continued international expansion, pride in raising shareholder value through management, is engrained in everything we do at Canopy Growth. Canopy Growth has established partnerships with leading industry names, including cannabis icon Snoop Dogg, breeding legends DNA Genetics and Green House seeds, Battelle, the world's largest nonprofit research and development organization, and Fortune 500 alcohol leader Constellation Brands, to name a few. Canopy Growth operates ten licensed cannabis production sites with over 4.4 million square meters of production capacity, including over 500,000 square meters of GMP certified production space. For more information visit www.canopygrowth.com.
The head office is in New York City is Acreage's largest vertically integrated, multi-state owner of cannabis licenses and US assets for the number of states with cannabis-related licenses, according to widely available information. Acreage owns licenses to operate or has management agreements entered into with licensees to assist in operations in 20 states (including pending acquisitions) with a population of approximately 180 million Americans, and an estimated 2022 total addressable market of more than $ 17 billion in legal sale of cannabis, according to Arcview Market Research. Area is dedicated to building and scaling operations to create a seamless, consumer-focused brand cannabis experience. Acreage's National Store brand, The Botanist, made its debut in 2018.
This press release contains "forward-looking statements" under the United States Private 1995 Litigation Reform Act of 1995 and "forward-looking information" under the applicable law. Canadian securities legislation. Often, but not always, forward-looking statements and information can be identified using words such as "plans", "expects" or "do not expect", "expected", "estimates", "intent" expects, or "do not expect" or "do not expect" Believe "or variations of such words and expressions or say that certain actions, events or results" may "," could "," would "," may "or" will "be taken, arise or accomplished. and unknown risks, uncertainties and other factors that may cause the actual results, results, or performance of Canopy Growth, Acreage or their respective subsidiaries to differ materially from future performance, performance or performance expressed or implied by forward-looking statements or disclosures in These forward-looking statements include, but are not limited to, statements related to our expectations regarding: time-lapse transaction and the result of the transaction; the expected benefits of the transaction to the parties and their respective security holders; influence on the transaction and expected growth of the overall unit and expected time of the meeting.
Risk, uncertainty, and other factors involved in forward-looking information may cause actual events, results, results, prospects, and opportunities to differ materially from those expressed or implied by such forward-looking information, including assumptions about the time required for to prepare and send security holders meeting materials; The parties 'ability to receive, in due time and on satisfactory terms, the necessary regulatory, legal and shareholder approvals The parties' ability to meet the other conditions in good time; the likelihood that the triggering arrangement is fulfilled or waived within the date of dispatch The ability of the parties to satisfy in time the conditions for closing after the satisfaction or waiver of the triggering arrangement; other expectations and assumptions about the transaction; and the risks found in Canopy Growth's annual information form dated June 19, 2018 and in Acreage's annual information form dated February 14, 2019 and filed with Canadian securities regulators available at Canopy Growth and Acreage's respective issuer profiles at SEDAR at www.sedar.com. Readers are warned that prior list of factors is not exhaustive.
Regarding the forward-looking statements and information on the expected benefits and performance of the Transaction and the expected date of completion of the Transaction, Canopy Growth and Acreage have provided such statements and information in relation to certain assumptions that they believe are reasonable at this time. While Canopy Growth and Acreage believes that the prerequisites and factors used to prepare forward-looking information or forward-looking statements in this press release are reasonable, unnecessary trust should not be placed on such information, and it cannot be guaranteed that such events will occur in the specified information. time frames or at all. Future information and forward-looking statements included in this press release are made from the date of this press release and Canopy Growth and Acreage undertakes not to publicly update any forward-looking information or forward-looking information to reflect new information, subsequent events or otherwise, with unless it is required by applicable securities laws.
It cannot be guaranteed that the Transaction, including the triggering event, will occur or will occur under the terms of this press release. The transaction can be changed, restructured or terminated. Actual results may differ materially from those expected due to a variety of factors and risks.
The transaction cannot be closed until the required shareholder, legal and regulatory approval has been achieved. It cannot be guaranteed that the Transaction will be carried out as proposed or at all. Investors warn that, except as described in the management information circulars to be prepared in connection with the Transaction, information published or received with respect to the Transaction may not be accurate or complete and should not be invoked.
The Canadian Securities Exchange has not reviewed, approved or endorsed the contents of this press release.
SOURCE Canopy Growth Corporation