Canopy Growth Corporation (“Canopy”) (TSX: WEED) (NASDAQ: CGC) and The Supreme Cannabis Company, Inc. (“Supreme Cannabis” or “Supreme”) (TSX: FIRE) (OTCQX: SPRWF) (FRA: 53S1) are pleased to announce that they have entered into a definitive arrangement agreement (the “Arrangement Agreement”) under which Canopy will acquire all of Supreme Cannabis’ issued and outstanding common shares (the “Supreme Cannabis Shares”) in a transaction valued at approximately $435 million on a fully-diluted basis (the “Transaction”).
Under the terms of the Arrangement Agreement, Supreme Cannabis shareholders will receive 0.01165872 of a Canopy common share (the “Exchange Ratio”) and $0.0001 in cash in exchange for each Supreme Cannabis Share held. The Transaction provides Supreme Cannabis shareholders with a premium per Supreme Cannabis Share of approximately 66% based on the closing prices of the Supreme Cannabis Shares and Canopy common shares on the Toronto Stock Exchange (the “TSX”) as of April 7, 2021 .
The Transaction is expected to provide several benefits to both Canopy and Supreme Cannabis shareholders. Notably, following completion of the acquisition, Canopy will possess a strengthened brand portfolio including one of Canada’s leading premium brands, 7ACRES. Brand growth is anticipated with distribution supported by Canopy’s robust sales and distribution network as well as superior consumer insights and R&D capabilities. In addition to receiving a market premium, Supreme Cannabis shareholders will also benefit from Canopy’s US CBD business and conditional positioning for continued exposure to the US market expansion. Further value will be derived through the scalable Kincardine, Ontario production facility, which has a demonstrated record of producing premium flower at low cost.
Key Transaction Highlights
- Solidifies Canopy’s leadership position in the Canadian recreational market, well-positioned for growth: The Transaction combines Canopy’s preeminent position with Supreme Cannabis’ Top-10 position in Canada to create a pro forma Canadian recreational market share of 13.6% (1) , including 7ACRES holding Canada’s number one premium flower brand position, number one in PAX vapes, and Top-5 in pre-rolled joints (2) .
- Combined pro forma market share estimated to be 23.3% of the premium flower segment in Ontario and 21.4% in British Columbia (3) .
- Adds premium brands to Canopy’s portfolio: The addition of Supreme Cannabis’ premium brands, 7ACRES and 7ACRES Craft Collective, complement Canopy’s current consumer offering and will strengthen Canopy’s brand portfolio, with both brands expected to continue to grow with further investment and expansion. Supreme Cannabis’ Blissco and Truverra brands also add breadth to Canopy’s market…