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The $ 3.4 billion-so-soon-as-the-law marijuana merger – Axios



Between the lines: The non-contractual agreement is structured to avoid obstacles that would come with Canopy's direct acquisition of land before legalization. A deal will now receive Canopy shares de-listed from Toronto and the New York Stock Exchange, both of which prohibit listing companies with US cannabis operations since it is federally illegal. (Canada made marijuana quite legally nationwide in October.)

  • "This is like a very big double Dutch game, as in" if the rules change we are going to play, but until then we continue to spin the ropes. "It's a pending battle," says Brent Williams, founder of Highwater Financial, a cannabis-focused investment firm, for Axios.
  • "There is a great precedent to set for Aurora Cannabis in the world to come in for further expansion of Canadian companies in the United States"

How It Works : The deal is terminated if cannabis is not legalized (or if exchange does not change its rules) within 7.5 years or 90 months. If the deal falls through, there is no word on what happens to the $ 300 million in advance cash Canopy agreed to pay shareholders.

  • But the leaders of both companies and many analysts are optimistic the law will pass within the next 2 or 3 years. 19659003] The companies said the contract value was a 41% premium over Acreage's share price.

What is it for the companies:

  • "Canopy has been at risk of missing out on the US market as it grows. Now they have secured a path towards it while avoiding a direct acquisition today , Rob Wertheimer, a founder of Melius Research, said to Axios. "Area is linked to what has become an emerging North American leader and well positioned for growth. "

Bottom Line: This just built a way for businesses to buy into a burgeoning American marijuana market without breaking any laws and without turning to the wrath of the barter. Analysts say the deal structure could set off a wave of similar Transactions.

Go Deeper: 4/20 Selling High: Corporate America Embraces Marijuana Great Day


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