Canopy Growth and Acreage Holdings announced recently that the two cannabis giants are going to join forces. Because of the magnitude of the new deal, there are phases of activity that will need to be implemented, and the first phase is almost here. Canopy Growth announced last Friday that it is ready to make the first payment toward the acquisition, adding that it expects delivery to be made this coming Wednesday. That payment, however, isn’t going to Acreage executives or its accounts. It’s meant directly for Acreage shareholders.
Canopy Growth is going to provide an upfront payment of $37.5 million as part of the acquisition of Acreage, and this is expected to be made on Wednesday. The announcement by the company explains, “Holders of Acreage shares and certain securities convertible or exchangeable into Class A subordinate voting shares of Acreage (the ‘Subordinate Voting Shares‘ as of the close of business on September 22, 2020, the business day immediately preceding the Amendment Date (the ‘Record Date‘), will be entitled to receive their pro rata portion (on an as converted to Subordinate Voting Share basis) of US$37,500,024 (the ‘Upfront Payment‘) being paid by Canopy Growth. It is expected that the Upfront Payment will be distributed to such holders of record on or before the third business day following the Amendment Date. In connection with the Upfront Payment, each holder of shares of Acreage and certain other holders of securities convertible or exchangeable for Subordinate Voting Shares will receive approximately US$0.30 per Subordinate Voting Share (on an as converted to Subordinate Voting Share basis), with the final amount to be received by each holder to be determined based on the number of Subordinate Voting Shares into which all of the eligible securities would be converted at the close of business on the Record Date.”
The merger was first announced in April of last year and it was thought, at the time, that federal legislation of cannabis would have been in place by now. However, because lawmakers have been dragging their feet on the subject, Canopy Growth and Acreage have altered the terms of the agreement a couple of times, including the reduction of the upfront payment from $300 million to its current level. In addition, the merger is no longer specifically tied to any legislative efforts taking place on Capitol Hill regarding cannabis.