Constellation Brands has boosted its equity holding in marijuana company Canopy Growth to 38.6%, the company reported on Friday. Greenstar Canada Investment Limited Partnership, an indirect, wholly-owned subsidiary of Constellation Brands exercised nearly 18.9 million warrants at a price of just under CAD 12.98 (USD9.21) apiece, for a total of around CAD245 million (USD174 million). Upon issuance, the common shares represented approximately 5.1% of the issued and outstanding common shares of Canopy Growth.
“While global legalization of cannabis is still in its infancy, we continue to believe the long-term opportunity in this evolving market is substantial,” said Bill Newlands, President and Chief Executive Officer, Constellation Brands. “Canopy is best positioned to win in the emerging cannabis space and we are confident in the strategic direction of the company under David Klein and his team.”
"This additional investment validates the work our team has done since attracting the initial investment in 2017. It also strengthens our ability to pursue the immense market and product opportunities available to Canopy in Canada, the U.S. and other key global markets," said David Klein, who obtained the position as Chief Executive Officer of Canopy Growth in January 2020. Before that, Klein served in a number of senior leadership capacities over the past 14 years at Constellation Brands and as executive vice president and chief financial officer in his latest position within the company.
In October 2017 Constellation Brands made its first inroad into the marijuana market by buying a 9.9% minority share in Canopy Growth (inside.beer, 30.10.2017). Almost one year later, the company stacked up its investment in a deal worth USD 4 billion to above 30%, while also providing further warrants, which entitled Constellations Brands to buy the stock of the Canopy Growth at a fixed price until the expiry date (inside.beer, 15.8.2018). Some of these warrant have now been exercised.
Assuming full exercise of all remaining warrants and full conversion of the notes Constellation Brands would own approximately 55.8% of the issued and outstanding common shares of Canopy Growth.