Corona brewer pours $4 billion into Canadian pot grower

Corona brewer pours $4 billion into Canadian pot grower

Constellation, which makes and markets beer, wine and spirits in the US, Canada, Mexico, New Zealand and Italy, noted that governments around the world had already signalled a significant change in attitudes towards cannabis and cannabis-based products.

"Our business can now make the strategic investments required to accelerate our market position globally", said Linton. And Constellation has certainly made out nicely on its October 2017 purchase of a 10% Canopy stake-reporting a $700 million gain on that initial $190 million investment.

The Constellation deal comes as other alcohol companies have also started homing in on the cannabis industry.

Canopy is Canada's biggest cannabis firm, with a market capitalization of C$8.9 billion ($6.76 billion). In May, it began trading on the New York Stock Exchange in addition to the Toronto Stock Exchange.

Canopy, based in Smiths Falls, Ontario, has specialized in the medical product and doesn't now have operations south of the border.

The price that Constellation is paying values Canopy at about $12 billion, which is more than 40 times the revenue that the FactSet consensus foresees for Canopy's fiscal year ending March 2019, and 180 times profits for 2020-the first year in which analysts expect the unprofitable venture to report earnings.

"Canopy Growth remains committed to not entering the USA market in any manner that would contravene US federal laws", the company said in a statement.

Constellation Brands, the alcoholic beverage company behind such brands as Corona and Svedka Vodka, announced today that they are acquiring 104.5 million shares of Canopy Growth, the country's largest cannabis producer, for a total of $5 billion CND.

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Herzog added "there is an expectation that marijuana will eventually be legalized in the U.S".

Under the deal's terms, Constellation can exercise options over the next three years that would grant it a controlling stake in Canopy.

"Constellation's concentration of global cannabis activities exclusively through Canopy, coupled with the investment and its expert capabilities... will be a huge benefit as we look to expand our portfolio in Canada, the United States and emerging cannabis markets around the globe".

Hold onto your hats everyone, an absolutely epic Canopy Growth Corp (TSE:WEED) (NYSE:CGC) (FRA:11L1) fueled cannabis sector upswing is expected to kick-off in the next 60 minutes. The acquisition price is right a few cents below Canopy Growth's all-time high, even though the common shares are (were) trading at a ↓32.68% discount, as of yesterday's close.

As part of the proposed transaction, Constellation will nominate four directors to Canopy's seven-member board of directors, chaired by founder Bruce Linton.

The investment overshadowed a bigger-than-expected first-quarter loss by the Canadian cannabis company.

Canopy Growth will remain a Canadian company with its headquarters in Smiths Falls, Ontario, and will continue to be led by its existing management team.

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