The Globe and Mail reports in its Thursday edition that Constellation Brands is making a $5-billion bet on Canopy Growth ($42.20). The Globe's Mark Rendell and Jeffrey Jones write that Canopy shares surged 31 per cent on Wednesday, giving the company a market value of about $9.2-billion. The Globe says it is a rich valuation, given Canopy on Tuesday reported first quarter revenue of $25.9-million and a net loss of $91-million.
Constellation took the weed industry by surprise last October when it bought into Canopy for $245-million. The latest deal will increase its position to 38 per cent from about 18 per cent, as Constellation purchased 104.5 million Canopy shares at $48.60, a 51-per-cent premium to Tuesday's closing price in Toronto.
Canopy is also granting Constellation warrants that, if fully exercised, will lift its interest above 50 per cent and inject another $4.5-billion into the marijuana producer. Co-chief executive officer Bruce Linton said Wednesday Canopy is not looking to buy more growing facilities in Canada. He said it may, however, use the cash to build bottling facilities for cannabis beverages and expand its retail footprint, especially in Ontario where private pot shops will be legal.
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