Canopy Growth Corp. (NYSE: CGC) shares dipped on Wednesday, following the markets lower after the firm announced that it will purchase a majority stake in a leading producer of sports nutrition products. Specifically, the weed giant is acquiring BioSteel Sports Nutrition in an all-cash transaction.
The transaction provides Canopy Growth with a significant platform to enter the sports nutrition and hydration segment, and it lays the groundwork for the adoption of cannabidiol (CBD) in future product offerings in accordance with regulations globally, including products to be sold in the United States containing CBD sourced from federally permissible industrial hemp.
This move accelerates Canopy Growth’s strategy to enter new markets with a platform spanning production, distribution and marketing of CBD products derived from hemp and cannabis in accordance with regulations across a number of different verticals. The transaction gives Canopy Growth a 72% stake in BioSteel with an agreed upon path to 100% ownership.
Additionally, BioSteel has national organizational partnerships with USA Hockey, Canada Basketball, Athletics Canada and the Professional Hockey Players Association. The company has over 10,000 points of distribution in Canada and the United States and continues to expand in both markets and into Europe.
Mark Zekulin, CEO of Canopy Growth, commented:
BioSteel has a reputation for being a best-in-class provider of natural sports nutrition products and all of its products are well positioned to benefit from the increasing trend of plant-based and all-natural products, preferred not only by professional athletes, but active consumers as well. This acquisition allows us to enter the sports nutrition space with a strong and growing brand as we continue towards a regulated market of food and beverage products that contain cannabis. We view the adoption of CBD in future BioSteel offerings as a potentially significant and disruptive growth driver for our business.
Shares of Canopy Growth traded down about 2% to $21.40 on Wednesday, in a 52-week range of $20.52 to $59.25.