Constellation Brands, through its subsidiary Greenstar Canada Investment, has increased its stake in Canopy Growth Corporation in a deal worth CAD 245 million ($174 million).
The distributor of Corona has exercised warrants to buy shares in Canopy Growth, taking its overall ownership of the cannabis company to 38.6%.
Constellation Brands initially invested in Canopy Growth in 2017 by purchasing a 9.9% stake for CAD 245 million ($191 million), as it intended to launch a series of cannabis-infused beverages.
In 2018, the company increased its holding to 38% by investing another CAD 5 billion ($4 billion) into the Canadian supplier of marijuana.
With its latest move, Constellation has exercised nearly 18.9 million shares for just under CAD 12.98 ($9.21) each.
Following this investment, Constellation still holds a large amount of warrants in Canopy Growth and if all were exercised, the company would own approximately 55.8% of the marijuana producer.
“This additional investment validates the work our team has done since attracting the initial investment in 2017. It also strengthens our ability to pursue the immense market and product opportunities available to Canopy in Canada, the US and other key global markets,” said David Klein, CEO of Canopy Growth.
At the end of last year, Constellation Brands CFO David Klein left his role to become CEO of cannabis company Canopy Growth, while production of Canopy Growth’s cannabis-infused beverages started at its headquarters in Smiths Falls, Ontario.
The announcement came after Constellation was hit by a $484.4 million loss on an investment it made in Canopy Growth in its recent second-quarter results, a loss which continued to decrease in its third quarter.
Bill Newlands, president and CEO of Constellation Brands, said: “While global legalisation of cannabis is still in its infancy, we continue to believe the long-term opportunity in this evolving market is substantial. Canopy is best positioned to win in the emerging cannabis space and we are confident in the strategic direction of the company under David Klein and his team.”
© FoodBev Media Ltd 2020
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