Canadian cannabis firm, Canopy Growth, has struck a new deal with Acreage Holdings to buy floating shares of the latter. Last April, a deal between the two firms stated the 100% sale of shares of Acreage Holdings.
But the deal has been revised under which Canopy Growth would buy 70% of Acreage Holdings once the US legalized cannabis. It is a great opportunity for Canopy Growth to explore the US cannabis market once the federal government legalized the sales and production of cannabis.
Under the new share agreement, Acreage will introduce two new share classes, a “fixed” share and a “floating” share. The percentage of fixed shares is 70% of the original shares and the remaining are the floating shares.
The exchange rate of fixed Acreage shares is reduced from 0.5818 to 0.3048 shares of Canopy. Canopy Growth is eligible to buy the floating shares at a price of at least $6.41and it is buying the shares before the legalization of cannabis in the US market
A one-time payment of $37.5 million is finalized by Canopy shareholders and the firm will also loan around $100 million to a subsidiary of Acreage. Canaccord analyst Matt Bottomley has expressed that a combined implied minimum deal price of ACRG is downgraded from US$ 9.49 to $5.49 per share.
He said that the floating shares allow the existing ACRG shareholders to participate in a value decided by the company on a temporary basis. Canopy Growth has also announced to launch THC-infused beverages in the US in 2021 by partnering with New York-based cannabis firm, Acreage Holdings.
Canopy has declared that it would announce Tweed carbonated drinks and Houseplant sparkling waters with a presence of 2-2.5 mg of THC in them. Moreover, new brands will also be introduced for adult people.