Significant additional production capacity and brand
diversification to Canopy Growth, Canada's leading cannabis company
- Canopy Growth will add two national brands to its portfolio,
increasing its production platform to 665,000 sq. ft., and
furthering its position as a domestic and global leader.
- Acquisition provides Canopy Growth with a full-spectrum
product offering including expansion of medically-focused &
lifestyle brands and the addition of a natural hemp brand.
- Acquisition rounds out best in class management with
significant industry experience.
- Acquisition allows for sharing of best practices and
production standards, with the potential to reduce costs and
realize revenue synergies.
- Mettrum shareholders to receive 0.7132 common shares (the
"Exchange Ratio") of Canopy Growth for each common share of
Mettrum.
SMITHS FALLS, ON and
TORONTO, Dec. 1, 2016 /CNW/ - Canopy Growth Corporation
(TSX: CGC) ("Canopy Growth" or the "Company") and Mettrum Health
Corp. ("Mettrum") (TSXV: MT) are pleased to announce that they have
entered into a definitive arrangement agreement (the "Arrangement
Agreement") pursuant to which Canopy Growth will acquire all of the
issued and outstanding shares of Mettrum (the "Arrangement"),
creating a world-leading diversified cannabis company with six
licensed facilities, and a licensed production footprint of
approximately 665,000 sq. ft., with significant acreage for
expansion.
The total transaction is valued at approximately C$430 million and will be satisfied by the
issuance of common shares in Canopy Growth. Under the terms of the
Arrangement Agreement, Mettrum shareholders will be entitled to
receive 0.7132 common shares of Canopy Growth for each common share
of Mettrum, representing consideration of C$8.42 per Mettrum common share based on the
closing price of Canopy Growth common shares on the Toronto Stock
Exchange ("TSX") on November 30,
2016. Upon completion of the Arrangement, existing Canopy
Growth and Mettrum shareholders are expected to own approximately
77.7% and 22.3%, respectively, of the pro forma company.
Strategic Rationale
- Dominant Market Position: Post-acquisition, Canopy
Growth will continue to fortify its position as the largest medical
marijuana company in Canada and as
a global leader with total licensed production square footage of
approximately 665,000 sq. ft., with significant acreage for
additional expansion.
- Expanded and Diversified Portfolio of Nationally Recognized
Cannabis and Hemp Brands: The combined company will bring
together Mettrum's simple, recognizable and proven Mettrum Spectrum
brand, with the pure medically-focused brand of Bedrocan Canada and
the approachable, lifestyle-focused brand of Tweed. On the hemp
side of the business, the integration of Mettrum Originals with
Canopy Growth's recently acquired hemp.ca platform will solidify
Canopy Growth's position in the hemp market.
- Cost and Revenue Synergies: The Company expects to
realize improved supply chain management and back office
efficiencies, cross-selling to customers given broader product
offerings and combined research capabilities.
- Industry-Leading Management Team: The combined company
will have best in class management with significant and diverse
industry experience.
- Well-Capitalized for Further Global Growth: Post
acquisition, Canopy Growth's cash balance of approximately
$68 million positions the Company
with one of the strongest balance sheets in the industry and leaves
the Company well-funded for expansion and product development
initiatives.
- Enhanced Financial Scale and Presence: A
widely-recognized and scalable platform to attract additional
patients and to position the Company favourably within all
distribution channels.
"From day one, Canopy Growth has viewed production capacity,
brand diversity, and highly-skilled management as the foundational
aspects of our business," said Bruce
Linton, Chairman and CEO of Canopy Growth. "Mettrum
has established a line of cannabis products that work well in a
medical context and will transition naturally into a natural and
healthy lifestyle market. Their substantial production facilities
will add to our growing production platform as we expand to meet
the needs of patients, and their experienced personnel will help
Canopy Growth drive our vision forward to the next level." Added
Linton: "Both Canopy Growth and Mettrum have proven themselves with
Canadian patients; and together we intend to make our
industry-leading product and service offering even stronger, while
developing our common hemp objectives."
"Canopy Growth and Mettrum have enjoyed a collaborative industry
relationship working on a number of patient and industry advocacy
efforts," said Michael Haines, CEO
of Mettrum. "Combining our companies' complimentary market
strengths, and management expertise, should result in a more
dynamic company well-positioned for emerging recreational and
international opportunities."
Arrangement Summary
The Arrangement Agreement provides that Mettrum shareholders
will be entitled to receive 0.7132 common shares of Canopy Growth
for each common share of Mettrum held, representing consideration
of C$8.42 per Mettrum common share
based on the closing price of Canopy Growth common shares on
November 30, 2016. Upon closing of
the acquisition, Mettrum will become a wholly-owned subsidiary of
Canopy Growth.
Each of the executive officers and directors of Mettrum, who
together hold approximately 15% of the outstanding common shares of
Mettrum have entered into voting support agreements in favour of
the Arrangement.
The Arrangement Agreement provides that Mettrum is subject to
non-solicitation provisions and provides that the Special Committee
of Mettrum may, under certain circumstances, terminate the
Arrangement in favour of an unsolicited superior proposal, subject
to a termination fee of C$10 million
(the "Termination Fee") to Canopy Growth and subject to a right to
match the superior proposal. The Arrangement Agreement
includes other customary termination provisions where a Termination
Fee is payable to Canopy Growth or Mettrum under certain
circumstances.
The acquisition will be carried out by way of plan of
arrangement under the Business Corporations Act
(Ontario) and will require the
approval of at least 66 2/3% of the votes cast by Mettrum
shareholders at a special meeting expected to take place in
January 2017.
Under applicable TSX rules, the transaction requires the
approval of Canopy Growth shareholders by a majority vote, as the
number of Canopy Growth common shares to be issued exceeds 25% of
the total number of outstanding Canopy Growth common shares, with
such approval expected to take place at a special meeting in
January 2017. Senior officers and directors of Canopy Growth
have also entered into voting support agreements pursuant to which
they will vote their common shares in favour of the
Arrangement.
Closing remains subject to approval of the shareholders of both
Canopy Growth and Mettrum, court approval, the approval of the TSX,
applicable regulatory approvals and the satisfaction of certain
other closing conditions customary in transactions of this
nature.
Additional details of the Arrangement will be provided to
Mettrum and Canopy Growth shareholders in respective information
circulars to be mailed in December 2016. It is expected that
shareholder meetings and closing of the Arrangement will occur in
January 2017.
Board Recommendations
The Board of Directors of both Canopy Growth and Mettrum, have
unanimously approved the transaction and recommend that
shareholders vote in favour of the transaction. The Board of
Directors of Mettrum has acted on the unanimous recommendation of
the Special Committee comprised solely of independent directors.
Dundee Securities Ltd. provided a fairness opinion to the Board of
Directors of Canopy Growth, stating that in its opinion, and based
upon and subject to the assumptions, limitations, and
qualifications set forth therein, the Exchange Ratio pursuant to
the Arrangement is fair, from a financial point of view, to the
Canopy Growth shareholders. Cormark Securities Inc. has
provided a fairness opinion to the Special Committee of the Board
of Directors of Mettrum, stating that in its opinion, and based
upon and subject to the assumptions, limitations, and
qualifications set forth therein, the Exchange Ratio pursuant to
the Arrangement is fair, from a financial point of view, to the
Mettrum shareholders. In addition, Echelon Wealth Partners
Inc. provided a fairness opinion to the Special Committee of the
Board of Directors of Mettrum, stating that the Arrangement is
fair, from a financial point of view, to the Mettrum shareholders,
subject to certain assumptions, limitations, and
qualifications.
Integrated Quality Assurance Approach
The Company is confident that Mettrum's response to the events
that led to the recall will result in operational practices that
will advance the quality and standards of the production of
cannabis at Mettrum's facilities.
Mettrum will continue to lead site activities with Health
Canada as it fulfills its obligations for products affected by
the previously announced Type III recall.
Canopy Growth has established a strong multi-site track record
of regulatory compliance across diversified production sites,
making it uniquely capable of implementing best practices and
moving forward to the highest production standards under the
Access to Cannabis for Medical Purposes Regulations (the
"ACMPR") issued pursuant to the Controlled Drugs and
Substances Act (Canada).
Financial and Legal Advisors
Dundee Securities Ltd. is acting as financial advisor to Canopy
Growth with LaBarge Weinstein LLP acting as legal advisor to the
Company.
Cormark Securities Inc. is acting as financial advisor to
Mettrum, Goodmans LLP is acting as legal counsel to
Mettrum and Aird & Berlis LLP is acting as legal counsel to the
Special Committee of Mettrum.
Conference Call Information
Canopy Growth and Mettrum will host a joint conference call to
discuss the transaction on December 1,
2016 at 8:30 a.m. (Eastern Daylight
Time). A copy of the presentation can be found on Canopy's
Growth's website at www.canopygrowth.com
Calling Information:
Toll Free Dial-In Number:
1-888-231-8191
International Dial-In Number (647) 427-7450
Conference ID: 30771775
Replay Information:
A replay of the call will be
accessible by telephone until 11:59 PM
ET on January 1, 2017.
Toll Free Dial-in Number: 1-855-859-2056
Replay Password: 30771775
A live audio webcast will be available
here.
About Canopy Growth Corporation
Canopy Growth is a
world-leading diversified cannabis company, offering diverse brands
and curated cannabis strain varieties in dried and oil extract
forms. Through its wholly‑owned subsidiaries, Tweed, Tweed
Farms, and Bedrocan Canada, Canopy Growth operates three
state-of-the-art production facilities with over half a million
square feet of indoor and greenhouse production
capacity. Canopy Growth has established partnerships with
leading sector names in Canada and abroad. For more
information visit www.canopygrowth.com.
About Mettrum Health Corp.
Mettrum Health Corp. is a
Tier 1 Industry Issuer listed on TSX Venture Exchange. Mettrum
Ltd., a wholly-owned subsidiary of Mettrum Health Corp., is a
Toronto-based company and a
licensed producer of medical cannabis under the ACMPR. Mettrum
received its first license from Health Canada on November 1, 2013 and began production of medical
cannabis at its first production facility in Bowmanville, Ontario. Mettrum received its
second license from Health Canada on December 11, 2014 for its other wholly-owned
subsidiary, Agripharm Corp., at the Mettrum Creemore facility in
Clearview, Ontario. Mettrum received its third license
from Health Canada on December 17,
2015 for Mettrum Ltd. at its new 60,000 square foot
production and distribution facility in Bowmanville, Ontario. With the company's three
licenses, Mettrum Health Corp. is a leading producer and vendor of
medical cannabis under the ACMPR system. In addition, through its
wholly-owned subsidiary Mettrum Hempworks, Mettrum also is a
licensed producer and distribution of industrial cannabis (hemp)
products, including Mettrum's functional food line, Mettrum
Originals™, under the Industrial Hemp
Regulations (Canada)
issued pursuant to the Controlled Drugs and Substances
Act (Canada).
Notice Regarding Forward Looking Statements
This news release contains forward-looking statements.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Canopy Growth Corporation, Tweed
Inc., Tweed Farms Inc. or Bedrocan Canada Inc. to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements. These
forward-looking statements include, but are not limited to,
statements relating to our expectations with respect to: the timing
and outcome of the proposed acquisition of all the issuance and
outstanding common shares of Mettrum; the anticipated benefits of
the transaction to the parties and their respective security
holders; impact of the transaction and enhanced infrastructure on
production capabilities; and the anticipated timing of the meeting
of Canopy Growth shareholders to consider the transaction and for
the closing of the transaction. Often, but not always,
forward-looking statements can be identified by the use of words
such as "plans", "expects" or "does not expect", "is expected",
"estimates", "intends", "anticipates" or "does not anticipate", or
"believes", or variations of such words and phrases or state that
certain actions, events or results "may", "could", "would", "might"
or "will" be taken, occur or be achieved. In respect of the
forward-looking statements and information concerning the
anticipated benefits and completion of the proposed transaction and
the anticipated timing for completion of the transaction, Canopy
Growth and Mettrum have provided such statements and information in
reliance on certain assumptions that they believe are reasonable at
this time, including assumptions as to the time required to prepare
and mail security holder meeting materials; the ability of the
parties to receive, in a timely manner and on satisfactory terms,
the necessary regulatory, court and shareholders approvals; the
ability of the parties to satisfy, in a timely manner, the other
conditions to the closing of the transaction; and other
expectations and assumptions concerning the transaction. There can
be no assurance that the proposed transaction will occur, or that
it will occur on the terms and conditions contemplated in this news
release. The proposed transaction could be modified, restructured
or terminated. Accordingly, readers should not place undue reliance
on the forward-looking statements and information contained in this
press release.
Since forward-looking statements and information address future
events and conditions, by their very nature they involve inherent
risks and uncertainties. Actual results could differ materially
from those currently anticipated due to a number of factors and
risks. Readers are cautioned that the foregoing list of factors is
not exhaustive. Additional information on other factors that could
affect the operations or financial results of the parties are
included in reports on file with applicable securities regulatory
authorities.
The forward-looking statements contained in this news release
are made as of the date of this release and, accordingly, are
subject to change after such date. Canopy Growth does not assume
any obligation to update or revise any forward-looking statements,
whether written or oral, that may be made from time to time by us
or on our behalf, except as required by applicable law.
Neither the Toronto Stock Exchange nor its Regulation
Services Provider (as that term is defined in policies of the
Toronto Stock Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Canopy Growth Corporation