Constellation Brands closes $5-billion investment in Canopy Growth

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Constellation Brands (NYSE:STZ) closed its $5-billion (Canadian) investment in Canopy Growth (TSX:WEED; NYSE:CGC) following approval by Canopy shareholders and all regulatory agencies, including the Canadian government under the Investment Canada Act.

The investment provides Canopy Growth with significant funding needed to build scale in the more than 30 countries currently pursuing federally permissible medical cannabis programs, while establishing the foundation needed to supply new recreational adult-use markets as cannabis becomes legal in markets around the world.

“Our cash position opens up a world of opportunity for us,”Bruce Linton, chairman and co-CEO of Canopy Growth, said in a statement.

“Relative to our valuation, we have never been in a better position to create shareholder value,” he added. “This investment was a landmark moment for the entire sector when it was announced. Now that the capital is Canopy’s to deploy, we’re going to quickly get to work increasing our lead by adding strategic assets around the world.”

The transaction increases Constellation’s stake in Canopy Growth to about 37%.

“We’re excited to expand our strategic partnership with Canopy Growth and to begin helping them build the global scale needed to win long-term,” said Rob Sands, CEO of Constellation. “The global cannabis market presents a significant growth opportunity and Canopy Growth is well-positioned to establish a strong leadership position in this fast-evolving category,” he added.

Constellation also appointed two members of its executive team and two independent directors to the board of Canopy Growth. They include Constellation president and COO, Bill Newlands, and EVP and CFO, David Klein, as well as independent directors, Judy Schmeling and Robert Hanson.

They replace Canopy Growth’s Chris Schnarr and Murray Goldman. Mr. Schnarr will continue with Canopy Growth and transition into a senior leadership role overseeing medical and therapeutic research commercialization.

Melane LaBelle Sampson