Canaccord Genuity Acts as Financial Advisor to Acreage on its Announced US$280 Million New U.S. Strategic Arrangement with Canopy
Canaccord Genuity is pleased to announce that on October 25, 2022, its client, Acreage Holdings, Inc. (CSE:ACRG.A.U, ACRG.B.U) (OTCQX: ACRHF, ACRDF) ("Acreage" or the "Company"), announced that it has entered into an arrangement agreement (the "Floating Share Agreement") with Canopy Growth Corporation (“Canopy” or “CGC”) (TSX: WEED, NASDAQ: CGC) and Canopy USA, LLC (“Canopy USA”), CGC’s newly-created U.S. domiciled holding company, pursuant to which, subject to approval of the holders of Class D subordinate voting shares of Acreage (the “Floating Shares”) and the terms and conditions of the Floating Share Agreement, Canopy USA will acquire all of the issued and outstanding Floating Shares for consideration of 0.4500 of a common share of Canopy (each whole share a “Canopy Share”) in exchange for each Floating Share (the “Transaction”).
The Transaction represents a premium of 17.2% to the Floating Shares based on the volume weighted average prices (“VWAP”) of the Floating Shares and Canopy Shares for the 30-day trading period ending on October 24, 2022, on the Canadian Securities Exchange and Nasdaq Global Select Market, respectively.
Canopy has also agreed to exercise its option pursuant to the prior plan of arrangement implemented on September 23, 2020 (the “Fixed Option”) to acquire Acreage’s outstanding Class E subordinate voting shares (the “Fixed Shares”), representing approximately 70% of the total shares of Acreage, at a fixed exchange ratio of 0.3048 of a Canopy Share for each Fixed Share.
Upon exercise of the Fixed Option and completion of the Transaction, Canopy USA will own 100% of all outstanding Fixed Shares and Floating Shares. Pursuant to a press release issued October 25, 2022, Canopy announced that, upon exercising the Fixed Option and closing of the Transaction, options to acquire 100% of the membership interests of Mountain High Products, LLC, Wana Wellness, LLC, and The Cima Group, LLC (together, “Wana”) and 100% of the shares of Lemurian, Inc. (“Jetty”), which are or will be held directly or indirectly by Canopy USA, will be exercised, and Canopy USA is expected to retain its conditional ownership position in TerrAscend Corp. (CSE: TER, OTCQX: TRSSF).
Acreage is a multi-state operator of cannabis cultivation and retailing facilities in the U.S., including the Company’s national retail store brand, The Botanist. Acreage’s wide range of national and regionally available cannabis products include the award-winning The Botanist brand, craft brand Superflux, the Tweed brand, the Prime medical brand in Pennsylvania, the Innocent brand in Illinois and others. Acreage also owns Universal Hemp, LLC, a hemp subsidiary dedicated to the distribution, marketing and sale of CBD products throughout the U.S.
CGC is a world-leading diversified cannabis and cannabinoid-based consumer product company, driven by a passion to improve lives, end prohibition, and strengthen communities by unleashing the full potential of cannabis. Leveraging consumer insights and innovation, CGC offers product varieties in high-quality dried flower, oil, softgel capsule, infused beverage, edible, and topical formats, as well as vaporizer devices by CGC and industry-leader Storz & Bickel. CGC’s global medical brand, Spectrum Therapeutics, sells a range of full-spectrum products using its colour-coded classification system and is a market leader in both Canada and Germany. Through CGC’s award-winning Tweed banner, CGC reaches its adult-use consumers and has built a loyal following by focusing on top quality products and meaningful customer relationships. CGC has entered into the health and wellness consumer space in key markets including Canada, the U.S., and Europe through BioSteel sports nutrition, and This Works skin and sleep solutions; and has introduced additional hemp derived CBD products to the U.S. through its First & Free and Martha Stewart CBD brands.
Canaccord Genuity acted as financial advisor to Acreage and provided a fairness opinion to the board of directors of Acreage with respect to the Transaction. Canaccord Genuity also acted as financial advisor to Acreage on its original transaction with CGC, dated April 18, 2019.