Constellation Brands announced yesterday that it has signed an agreement to acquire a minority stake in Ontario, Canada-based Canopy Growth Corporation, a public company that provides medicinal cannabis products.
“This investment and relationship is consistent with Constellation Brands’ long-term strategy to identify, meet and stay ahead of evolving consumer trends and market dynamics, while maintaining focus on its core total beverage alcohol business,” the company says in a press release.
Constellation has no plans to sell cannabis products in the U.S. or any other market unless it is legally permissible to do so at all government levels, the company adds.
“Canopy Growth has a seasoned leadership team that understands the legal, regulatory and economic landscape for an emerging market that is predicted to become a significant consumer category in the future,” says Constellation Brands President and Chief Executive Officer, Rob Sands. “Our company’s success is the result of our focus on identifying early stage consumer trends, and this is another step in that direction.”
Founded in 2014, Canopy Growth Corporation is one of the earliest commercial players in Canada’s legal cannabis market. The company is currently traded on the Toronto Stock Exchange (TSX) under the symbol “WEED” and has a market cap of more than $1.556 billion. The company owns a collection of brands serving customers in Canada and international markets where medicinal cannabis products are legal.
In conjunction with this investment, both companies intend to enter into an agreement to exchange knowledge and expertise.
“We are thrilled to have the backing of such a well-established and respected organization such as Constellation Brands,” said Bruce Linton, Chairman and Chief Executive Officer, Canopy Growth Corporation. “We look forward to working with the Constellation Brands team to access their deep knowledge and experience in growing brands as we continue to expand our business.”
The investment is expected to approximate $190.71 million, representing an ownership interest of 9.9% of Canopy Growth Corporation, plus warrants which give Constellation Brands the option to purchase an additional ownership interest in the future.
The transaction is expected to close during the third quarter of fiscal 2018.