- Constellation Brands Exercised Nearly 19 Million Canopy Warrants Boosting its Ownership Position in the Largest Cannabis Producer to Over 142 Million Shares
- As a Result of Constellation’s Warrant Exercise, Canopy Growth Added $245 Million to the Company’s Coffers
On Friday, it was reported that Constellation Brands (NYSE: STZ) (FRA: CB1A) exercised 18,876,901 warrants to purchase common shares of Canopy Growth (TSX: WEED) (NYSE: CGC) (FRA: 11L1) at roughly CDN $13 per share. The Corona maker’s move was a sizeable one, with the transaction representing approximately 5.1% of Canopy’s issued and outstanding shares.
The warrants were originally issued on November 2, 2017, as part of Constellation’s initial $245 million investment in the Canadian licensed producer (LP). As a result of the warrant exercise, Canopy will add approximately CDN $245 million to its cash position, coincidentally the same amount as Constellation’s 2017 investment.
“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,” stated Canopy Growth CEO David Klein.
After acquiring the new shares, here’s what Constellation Brands’ Canopy Growth position looks like now:
- Common Shares: 142,253,802
- Warrants: 139,745,453
- Senior Notes: CDN $200 million
In late 2018, Constellation set the cannabis sector ablaze after it substantially increased its position in Canopy in a deal worth $5 billion. Should Constellation decide to exercise all of its remaining warrants and fully convert its senior notes, the alcohol giant would see its ownership stake in Canopy Growth increase to over 55%.
“While global legalization of cannabis is still in its infancy, we continue to believe the long-term opportunity in this evolving market is substantial. 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,” added Bill Newlands, President and CEO of Constellation Brands.
Disclosure: The Cannabis Investor does not hold a position in any of the stocks mentioned in this article.