Canopy Growth recently announced that it had entered into a definitive agreement to purchase cannabis producer Supreme Cannabis. The company, which is involved in recreational, wholesale and medical cannabis, will be a significant acquisition for Canopy Growth’s portfolio, giving the latter more widespread coverage of the cannabis industry. The acquisition brings with it a number of advantages to the company, as well as to shareholders, and will solidify Canopy Growth’s position in the global cannabis market.
Canopy Growth shareholders will immediately see results from the acquisition. They will be supporting a stronger brand portfolio with attractive financial synergies that will leverage Canopy Growth’s wide range of activity, which will, in turn, lead to accelerated revenue growth. It will also give the company additional capital to focus on global expansion, which will also benefit shareholders in the long term. In the near term, the acquisition will further position Canopy Growth as the leader in the Canadian recreational cannabis market, with immediate returns for shareholders.
Canopy Growth will add a new indoor greenhouse cultivation platform that has demonstrated the capability of consistently producing premium flower from popular strains at low cost, in a facility that has significant potential for scaling. In addition, it will be able to strengthen its genetic library and adds expertise in cultivation, strain development and extraction. The synergies created by the integration of The Supreme Cannabis will lead to gross sales revenue of as much as $33 million within two years.
The Supreme Cannabis shareholders will benefit, as well. The transaction will provide them with a premium per Supreme Cannabis share of approximately 66%, based on the closing prices of the Supreme and Canopy common shares on the TSX on April 7, 2021, the date the acquisition was announced. In addition, they will also benefit from Canopy Growth’s US CBD (cannabidiol) business and conditional positioning for continued exposure to the US market expansion.