Constellation invests $5B in Tweed Farms parent
Canopy Growth has received a $5-billion boost from Constellation Brands.
The beverage company, which until the end of 2016 owned a number of Canadian wine brands including Jackson-Triggs and Inniskillin in Niagara-on-the-Lake before it sold the wine business to the Ontario Teachers’ Pension Plan, is reestablishing some ties to the town. Smith Falls, Ont.-based Canopy Growth operates Tweed Farms in NOTL, which has been in operation since 2014 growing medical marijuana.
In the fall of 2017, Tweed announced the company had purchased a parcel of land which included an operational 458,000square-foot greenhouse for the purpose of expanding the operation.
The investment comes in the form of the purchase of 104.5 million shares directly from Canopy Growth, giving Constellation about 38 per cent ownership. Constellation will also receive warrants of Canopy that, if exercised, would provide for at least an additional $4.5 billion to the cannabis producer.
“Through this investment, we are selecting Canopy Growth as our exclusive global cannabis partner,” said Constellation chief executive officer Rob Sands. “Over the past year, we've come to better understand the cannabis market, the tremendous growth opportunity it presents, and Canopy's market-leading capabilities in this space.”
Through its subsidiaries, which include Tweed and Spectrum Cannabis, Canopy Growth has established a global presence in 11 countries.
“Our business can now make the strategic investments required to accelerate our market position globally,” said Canopy co-CEO Bruce Linton. “Constellation's concentration of global cannabis activities exclusively through Canopy, coupled with the investment and its expert capabilities in brand-building, marketing, consumer insights and M&A will be a huge benefit as we look to expand our portfolio in Canada, the United States and emerging cannabis markets around the globe.”
As part of the proposed transaction, Constellation will nominate four directors to Canopy Growth's seven-member board of directors, chaired by Linton. Canopy’s existing management team will continue to manage all cannabis operations.
Constellation is also receiving 139.7 million new warrants, which the company can exercise in the next three years. If all the warrants were exercised, the beverage company’s stake in Canopy would surpass 50 per cent.
The transaction is subject to customary closing conditions, including Canopy shareholder approval and applicable Canadian government and regulatory approvals, and is expected to close by the end of October.