Canopy Growth Corp. (NYSE: CGC) shares jumped on Thursday after the firm announced that it has entered into a definitive agreement to acquire Acreage Holdings. The deal will take place at such a time as cannabis production and sale becomes federally legal in the United States.
Under the terms of the agreement, Canopy Growth will be acquiring Acreage for a grand total of $3.4 billion. Acreage shareholders will receive an immediate aggregate total payment of $300 million. or approximately$2.55 per acreage subordinate voting share.
Additionally, holders of subordinate voting shares of Acreage will receive 0.5818 of a common share of Canopy Growth for each Acreage subordinate voting share held at the time of closing of the transaction.
On a fully diluted basis, this deal represents a premium of 41.7% over the 30-day volume weighted average price of the Acreage subordinate voting shares on the Canadian Securities Exchange ending April 16, 2019.
Bruce Linton, Canopy Growth board chair and co-CEO, commented:
Today we announce a complex transaction with a simple objective. Our right to acquire Acreage secures our entrance strategy into the United States as soon as a federally-permissible pathway exists. By combining Acreage’s management team, licenses and assets with Canopy Growth’s intellectual property and brands, there will be tremendous value creation for both companies’ shareholders.
Shares of Canopy Growth were last seen up over 6% at $45.70, in a 52-week range of $20.99 to $59.25.