Smiths Falls, from the city of Ond, said the deal was worth about $ 435 million on a fully diluted basis. According to the rules, peak cannabis shareholders will receive 0.01165872 in the common stock of a canopy, and 000 0.0001 cash in exchange for each peak cannabis share. The canopy said it was about 66 percent premium based on Monday’s closing prices for shares of both companies on the Toronto Stock Exchange. The deal is expected to expire in June 2021.
After emerging as an early leader in the Canadian entertainment cannabis market, the canopy saw the share of non-medical sales as its competitors gained strength. The company hopes to regain ground by acquiring the Toronto-based Supreme 7ACRES premium pod brand.
“Supreme’s deep commitment to high genetics, high-level cultivation and rigorous quality control, coupled with Canopy’s leading consumer intelligence, advanced R&D and innovation capabilities, is expected to create a powerful blend of segments with our Strategic Center to develop growth with premium quality products. “Canopy Development CEO (CEO) David Klein said in a news release Thursday.
The announcement comes on the heels of Canopy’s agreement with Ontario-based white label maker Ace Valley to acquire pre-rolled joints, wabs and cooking utensils. The financial terms of that agreement have not been released.
The canopy said the acquisition of Supreme would result in a $ 30 million cost synchronization within two years of the end of the contract. This agreement will add the convenience of the Supreme to Ond, Kincardine. The canopy pot cultivation track has shrunk drastically by the company through plant closures last year.
In terms of pro form, the company is expected to have a 13.6 percent share of the overall Canadian entertainment cannabis market. It is expected to command 23.3 per share in the premium cannabis flower market in Ontario and 21.4 per share in that segment in BC.
Last month, Canopy announced it had borrowed $ 750 million from King Street Capital Management, a private equity group. The move raised expectations that contracts would be on the horizon. On Thursday, the canopy is expected to hold about $ 2.5 billion in its balance sheet, following a Supreme Acquisition deal to finance expansion and product development.
For top shareholders, the deal with Canopy represents a path to the United States market, where the company is developing a CPT business prior to federal pot legalization.
“We are successful in delivering the best products that have achieved strong customer loyalty and are operating at a leading performance level in the industry,” Peena Goldenberg, President and CEO of Supreme Cannabis, added at the launch.
“We have also created the much-coveted premium brand at 7ACRES. Combining top-tier cannabis with canopy – the Canadian market leader with US exposure – offers both companies the opportunity to create significant value.”
The canopy said the deal has been approved by its board and the Supreme Board, which recommends that top shareholders vote in favor of the transaction. The agreement requires the approval of at least two-thirds of the top shareholders at a special meeting in June.
Shares of the Toronto Stock Exchange were up 52.83 percent at $ 0.40 at 9:51 a.m. Thursday. Shares of Toronto-listed canopy fell 1.75 percent to $ 37.16.
Jeff Lagerkist is a senior correspondent at Yahoo Finance Canada. Follow him on Twitter ejefflagerquist.