Canadian cannabis industry leader Canopy Growth has entered an M&A deal to acquire New York-based Acreage Holdings. Although already authored and agreed on by both entities, the deal will not be implemented until the United States government federally decriminalizes marijuana. The $3.4 billion deal is the largest ever of its kind.
Canopy Growth became the first publicly traded North American cannabis company in 2014. According to CEO, Bruce Linton, “We followed that with being the first to complete a “bought deal”, to diversify our platform to include both greenhouse and indoor growing, to acquire a major competitor and to be listed on the Toronto Stock Exchange.”
Combining Canopy Growth with Acreage Holdings will create a marijuana industry juggernaut that is sure to increase valuations of the North American sector of the international cannabis industry. Resultantly, there are record numbers of entrepreneurs looking for start up capital for marijuana dispensaries and other types of cannabis business loans.
Currently, the United States accounts for about 34% of the total revenue of recreational and medical cannabis revenue in the world. Comparatively, Canada accounts for about 3%. This new merger deal is designed to drive both of those rates up higher.
Marijuana Business Daily reports, “The deal announced Thursday gives Canopy the right to acquire all of Acreage’s shares when cannabis production and sale becomes legal at a national level in the United States. Under the terms of the agreement, Acreage will receive an immediate payment of $300 million.”
When the deal is executed, Acreage Holdings subordinate voting shareholders will receive 0.5818 per common stock in Canopy Growth. This brings the total valuation of the deal to $3.4 billion, the single largest transaction ever within the marijuana industry. This massive deal increases investor confidence in the industry, creating a large demand for cannabis business loans.
This landmark land-grabbing transaction is sure to spark fires under the butts of CEOs from numerous sectors – including tobacco, alcohol, pharmaceuticals, and consumer products. Many analysts believe that these and other key Canadian and American markets will experience rapid and significant acceleration.
In the long-term, this deal is setting up a platform that will lead to overall higher prices in the cannabis industry. Tight regulatory controls and the people and entities that enforce them will continue to cost more and more to support.
Canopy Growth CEO, Bruce Linton asserts that this deal will fuel the firm’s positioning for significant international expansion in the near future. This M&A transaction allows for Canopy Growth expansion into the United States hemp market. Canopy Growth already plans on investing more than $150 million in the New York hemp industry.
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