Home News Business News Canadian cannabis giant Canopy Growth acquires its US competitor Acreage Holdings

Canadian cannabis giant Canopy Growth acquires its US competitor Acreage Holdings

Canopy Growth

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The thrifting legal marijuana industry in North America faces a major acquisition deal. Canadian industry giant Canopy Growth intends to acquire its US competitor Acreage Holdings. The companies announced the deal on Thursday and estimated that it worths 3.4 billion USD.

So far, Canada has been at the center of mergers and acquisitions in the cannabis business, because it was legalized at the federal level. But the US market is already bigger despite the prevailing federal ban. This put pressure on Canadian companies to find a way to enter the huge US market.

However, a precondition for the acquisition would be the national legalization of cannabis production under US federal law. So far, the drug has been authorized in many states for medical purposes or recreation use, but not by the central government in Washington.

Canopy Growth will pay 300 million USD for the right to acquire Acreage Holdings, and the rest of the amount will be paid after the acquisition. Shareholders will receive another 0.5818 shares of Canopy when cannabis is legalized in the United States, representing a 42% premium above the average price for the past 30 days of Acreage.

If in the next 90 months, or 7.5 years, marijuana is not legalized at the federal level in the US, the deal may be terminated, it is clear from the contract. This means that Canopy and Acreage bet that the ban on marijuana will be abolished in the US by 2027.

The bet of the Canadian company on the neighboring marijuana market was well received by investors – Canopy’s shares jumped more than 8% within the New York session. Acreage’s securities posted even higher growths.