Canopy to ac­quire Storz & Bickel for 145M eu­ros

Stockwatch Daily - - FRONT PAGE - Mr. Bruce Lin­ton re­ports

CANOPY GROWTH Corp. has fi­nal­ized an all-cash trans­ac­tion to ac­quire Storz & Bickel GmbH & Co. KG, re­lated en­ti­ties and in­tel­lec­tual prop­erty for a pur­chase price of up to ap­prox­i­mately 145 mil­lion eu­ros. With a 22-year record of break­through in­no­va­tions, Storz & Bickel is widely rec­og­nized as the global leader in va­por­izer de­sign and man­u­fac­tur­ing.

Based in Tut­tlin­gen, Ger­many, Storz & Bickel is a de­signer and man­u­fac­turer of med­i­cally ap­proved va­por­iz­ers, most no­tably the Vol­cano Medic and the Mighty Medic. Storz & Bickel has spent the last two decades de­vel­op­ing an au­to­mated and in­ter­na­tion­ally cer­ti­fied fac­tory, achiev­ing ISO 13485 cer­ti­fi­ca­tion in 2009. The com­pany has ex­ported de­vices to 50 mar­kets around the world.

The ac­qui­si­tion will see Storz & Bickel’s epony­mous founders Markus Storz and Ju­r­gen Bickel re­main­ing as a part of the or­ga­ni­za­tion to con­tinue driv­ing the busi­ness for­ward along­side Canopy Growth’s man­age­ment.

“Join­ing Canopy will en­able S&B to take the next sig­nif­i­cant devel­op­ment step for­ward. Ac­cess to Canopy Growth’s ex­ten­sive port­fo­lio of test lab­o­ra­to­ries as well as phar­ma­ceu­ti­cal and med­i­cal-sci­en­tific know-how opens up en­tirely new prod­uct devel­op­ment op­por­tu­ni­ties,” said Ju­r­gen Bickel, chief ex­ec­u­tive of­fi­cer, Storz & Bickel. “I am look­ing for­ward to ac­tively shap­ing this devel­op­ment per­son­ally in a se­nior lead­er­ship po­si­tion. On the one hand to en­sure con­ti­nu­ity and on the other hand to ac­cel­er­ate the devel­op­ment to­gether with the Canopy team to lead it to un­prece­dented heights.”

“We view this as a mar­quee ac­qui­si­tion of the most rec­og­nized tech­nol­ogy com­pany in the in­dus­try,” said Bruce Lin­ton, chair­man and co-CEO, Canopy Growth. “This com­pany is well po­si­tioned for the next wave of fed­er­ally reg­u­lated prod­ucts in Canada beyond dried flower and ed­i­ble oils. By com­bin­ing Canopy’s ex­ist­ing de­signs and Canada’s open en­vi­ron­ment for fed­er­ally per­mis­si­ble R&D with Storz & Bickel’s deep IP port­fo­lio and man­age­ment team, Canopy Growth is poised to lead the high-mar­gin va­por­iz­ing cat­e­gory around the world.”

Storz & Bickel is a glob­ally ex­e­cut­ing, prof­itable busi­ness with proven prod­ucts and con­sis­tently in­creas­ing reve--

nues. Its IP port­fo­lio of 17 filed patents will im­prove Canopy Growth’s ex­ist­ing va­por­izer de­sign op­er­a­tions, over­seen by chief tech­nol­ogy of­fi­cer Peter Pop­plewell, PhD. Draw­ing on ta­lent from Ot­tawa’s world-renowned tech ecosys­tem, Canopy Growth has a team of hard­ware and soft­ware en­gi­neers de­vel­op­ing a line of ad­vanced va­por­iz­ing de­vices.

Mr. Pop­plewell com­mented: “S&B quite lit­er­ally in­vented the va­por­izer mar­ket. They make the best per­form­ing, high­est qual­ity and most re­spected prod­ucts in the seg­ment. Lever­ag­ing their IP into the tech-heavy va­por­izer de­signs we have in progress will al­low us to bring prod­ucts to mar­ket that will set a new bar in terms of qual­ity, func­tion­al­ity and con­sumer safety.”

An ISO 13485 cer­ti­fi­ca­tion means that the Storz & Bickel fa­cil­ity has been scru­ti­nized by ex­ter­nal au­di­tors and found to be com­pli­ant with all re­quire­ments needed to pro­duce med­i­cal de­vices. It is a pres­ti­gious and oner­ous stan­dards des­ig­na­tion that will give Canopy Growth a mul­ti­year lead in the med­i­cally ap­proved va­por­izer mar­ket. The Ger­man fa­cil­ity has the ca­pac­ity to sat­isfy grow­ing prod­uct de­mand and based on Canopy Growth’s ex­ist­ing in­ter­na­tional foot­print and ac­cess to Storz & Bickel’s pro­duc­tion ex­per­tise, the com­pany is now well po­si­tioned to lead the va­por­izer seg­ment mov­ing for­ward.

In ad­di­tion to strength­en­ing Canopy Growth’s path to mar­ket with ad­vanced va­por­iz­ing tech­nol­ogy, bring­ing Storz & Bickel un­der the canopy strength­ens the com­pany’s Ger­man op­er­a­tions. With Euro­pean head­quar­ters in Frank­furt, Canopy Growth also op­er­ates a GMP-(good man­u­fac­tur­ing prac­tices)-cer­ti­fied im­port and ex­port fa­cil­ity in St. Leon-Rot where med­i­cal cannabis is im­ported from Canada, pack­aged, la­belled and dis­trib­uted to ap­prox­i­mately 2,000 phar­ma­cies in Ger­many and other Euro­pean mar­kets.

Canopy Growth’s sub­stan­tial cash re­serve is amongst its great­est strate­gic ad­van­tages. Man­age­ment will con­tinue to add to the largest and most so­phis­ti­cated in­ter­na­tional pro­duc­tion plat­form with strate­gic ac­qui­si­tions that im­prove its IP port­fo­lio and give Canopy Growth sub­sidiaries ac­cess to new mar­kets by fur­ther strength­en­ing sup­ply ca­pa­bil­i­ties.

Dur­ing the ac­qui­si­tion process Green­hill & Co. Canada Ltd. acted as fi­nan­cial ad­viser to Canopy Growth and pro­vided a fair­ness opin­ion to the Canopy Growth board of di­rec­tors.

Here is to fu­ture growth.

About Canopy Growth Corp.

Canopy Growth is a world-lead­ing di­ver­si­fied cannabis and hemp com­pany, of­fer­ing dis­tinct brands and cu­rated cannabis va­ri­eties in dried, oil and soft­gel cap­sule forms. From prod­uct and process in­no­va­tion to mar­ket ex­e­cu­tion, Canopy Growth is driven by a pas­sion for lead­er­ship and a com­mit­ment to build­ing a world-class cannabis com­pany one prod­uct, site and coun­try at a time. The com­pany has op­er­a­tions in 12 coun­tries across five con­ti­nents. The com­pany is proudly ded­i­cated to ed­u­cat­ing health care prac­ti­tion­ers, con­duct­ing ro­bust clin­i­cal re­search and fur­ther­ing the pub­lic’s un­der­stand­ing of cannabis, and through its wholly owned re­search arm, Canopy Health In­no­va­tions, has de­voted mil­lions of dol­lars to­ward cut­ting-edge, com­mer­cial­iz­able re­search and IP devel­op­ment.

We seek Safe Har­bor.

John K Bell, Mur­ray Gold­man, Bruce Lin­ton, Christo­pher James Sch­narr, Peter E String­ham

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