SMITHS FALLS, ON and
TORONTO, July 10, 2018 /CNW/ - Canopy Growth
Corporation ("Canopy Growth") (TSX: WEED) (NYSE: CGC) and Hiku
Brands Company Ltd. ("Hiku") (CSE: HIKU) (together, the
"Companies") are pleased to announce that they have entered into a
definitive arrangement agreement (the "Agreement") pursuant to
which Canopy Growth will acquire all of the issued and outstanding
common shares of Hiku (the "Transaction").
Under the terms of the Agreement, Hiku shareholders will receive
0.046 of a Canopy Growth common share (each whole share, a "Canopy
Share") in exchange for each common share of Hiku (each, a "Hiku
Share"), representing the equivalent of C$1.91 per Hiku Share and a premium of 33% based
on the 20-day volume weighted average prices of the Canopy Shares
and the Hiku Shares as of July 9,
2018, and a premium of approximately 21% based on the
closing prices of the Canopy Shares on the Toronto Stock Exchange
("TSX") and the Hiku Shares on the Canadian Stock Exchange ("CSE")
on July 9, 2018.
"Hiku equals brands. Canopy is built on brands. So we combined
them," said Bruce Linton, Chairman
& CEO, Canopy Growth, in haiku.
Alan Gertner, Chief Executive
Officer of Hiku said: "This Transaction represents an incredible
step in the Hiku journey that both realizes immediate benefits for
our shareholders and at the same time provides an unparalleled
opportunity to join forces with a preeminent global cannabis
player. Ultimately, together we will continue to build one of the
world's most engaging and successful cannabis retail and brand
business. Canopy is a truly special cannabis company that is well
positioned to lead both in Canada
and around the world."
Transaction Highlights:
- Secures an Immediate Attractive Premium for Hiku
Shareholders: The Transaction provides Hiku
shareholders with a premium of 33% based on the 20-day volume
weighted average prices of the Canopy Shares and the Hiku Shares as
of July 9, 2018, and a premium of 21%
based on the closing prices of the Canopy Shares on the TSX and the
Hiku Shares on the CSE on July 9,
2018.
- Strengthening a Leading Vertically Integrated Global
Cannabis Company: Canopy Growth is a leading diversified
global cannabis company and market leader with distinct brands and
an award-winning product portfolio that spans federally legal
markets around the globe in both medical and recreational segments.
This transaction strengthens the diversity and range of brands in
the portfolio and improves access to multiple demographic
segments
- Integration of Retail Operations: The Transaction
provides Canopy Growth and Hiku with an integration and expansion
opportunity with respect to retail stores in provinces where direct
consumer sales will be permitted pursuant to the Cannabis Act,
including a pipeline of growth opportunities.
- Complimentary Portfolio of Brands: The
Transaction provides Canopy Growth and Hiku with the opportunity to
leverage a combined portfolio of established brands through their
respective retail stores across the country and thereby generate
incremental opportunities with distributors.
- Alignment with Strong Management
Team: Hiku's strong management team brings
best-in-class retail, design and marketing experience, which are
well aligned with and further supplements Canopy's existing
strategy and operations.
- Strong Access to and Immediate Availability of
Capital: Canopy Growth recently closed the issuance of
convertible notes amounting to $600
million in gross proceeds. This capital and liquidity will
support both Companies continued expansion efforts
- Continued Participation in Expanded
Platform for Future Growth: Hiku shareholders, through
their ownership of Canopy Shares, will have the opportunity to
participate in the growth of Canopy Growth and will benefit from
the enhanced growth prospects of the combined company. The
Transaction will provide substantial infrastructure and operational
support to accelerate Hiku's growth strategy, future product
development and innovation, together with Canopy Growth and its
global partners.
- Enhanced Liquidity and Capital Markets Profile:
Canopy Growth is listed on both the New York Stock Exchange
("NYSE") and the TSX. Canopy Shares are highly liquid with an
average daily trading volume of approximately 5.4 million shares,
representing approximately C$197
million on a daily basis over the last three months.
Additional Transaction Details
The Transaction will be carried out by way of a court-approved
plan of arrangement under the Business Corporations Act
(British Columbia) and will
require the approval of at least 66 2/3% of the votes cast by the
shareholders of Hiku at a special meeting expected to take place in
August 2018 (the "Meeting"). In
addition to Hiku shareholder approval, the Transaction is subject
to applicable regulatory, court and stock exchange approvals and
certain other closing conditions customary in transactions of this
nature. No approval of Canopy Growth shareholders is required in
connection with the Transaction.
The board of directors of Hiku (the "Hiku Board") has
unanimously approved the Agreement and recommends that shareholders
of Hiku vote IN FAVOUR of the Transaction. A management information
circular will be mailed to shareholders in connection with the
Meeting. BMO Capital Markets and INFOR Financial Inc. have each
provided an opinion to the Hiku Board to the effect that, based
upon and subject to the assumptions, limitations, and
qualifications in such opinions, the consideration to be received
pursuant to the Agreement is fair, from a financial point of view,
to Hiku shareholders.
Each of the directors and senior officers of Hiku, who hold in
aggregate 28.5% of the issued and outstanding Hiku Shares, have
entered into voting support agreements with respect to the
Transaction pursuant to which, among other things, they have agreed
to vote in favour of the Transaction at the Meeting.
The board of directors of Canopy Growth (the "Canopy Board") has
unanimously approved the Agreement. Greenhill & Co. Canada Ltd.
("Greenhill") has provided an opinion to the Canopy Board that,
subject to the assumptions, limitations and qualifications set out
in such opinion, the exchange ratio provided for in the Agreement
is fair, from a financial point of view, to Canopy Growth.
The Agreement includes certain non-solicitation covenants
subject to the right of Hiku to accept a superior proposal in
certain circumstances, with Canopy Growth having a five-business
day right to match any such superior proposal received by Hiku. The
Agreement also provides for the payment of a C$15 million termination fee, if the Transaction
is terminated in certain specified circumstances.
On July 10, 2018, the Hiku Board
unanimously determined, after receiving the advice of its financial
and legal advisors, that the Transaction constitutes a "Superior
Proposal" pursuant to the arrangement agreement between Hiku and
WeedMD Inc. ("WeedMD") originally announced on April 19, 2018 (the "WeedMD Agreement"). The Hiku
Board provided notice of that determination to WeedMD. WeedMD
has waived its "right to match" the proposal by Canopy
Growth. Accordingly, the WeedMD Agreement has been terminated
and Hiku has paid a termination fee of C$10
million to WeedMD pursuant the terms of the WeedMD
Agreement. Canopy has advanced Hiku the funds to pay the
termination fee pursuant to a promissory note.
Advisors and Counsel
Cassels Brock & Blackwell LLP
is acting as legal counsel to Canopy Growth. XIB Financial and
Greenhill acted as financial
advisors to Canopy Growth and Greenhill has provided a fairness opinion to
the Canopy Board.
Wildeboer Dellelce LLP is acting as legal counsel to Hiku. BMO
Capital Markets is acting as financial advisor to Hiku and BMO
Capital Markets and INFOR Financial Inc. have each provided a
fairness opinion to the Hiku Board.
About Canopy Growth Corporation
Canopy Growth is a
world-leading diversified cannabis and hemp company, offering
distinct brands and curated cannabis varieties in dried, oil and
Softgel capsule forms. From product and process innovation to
market execution, Canopy Growth is driven by a passion for
leadership and a commitment to building a world-class cannabis
company one product, site and country at a time.
Canopy Growth has established partnerships with leading sector
names including cannabis icon Snoop Dogg, breeding legends DNA
Genetics and Green House seeds, and Fortune 500 alcohol leader
Constellation Brands, to name but a few. Canopy Growth operates ten
cannabis production sites with over 2.4 million square feet of
production capacity, including over 500,000 square feet of
GMP-certified production space. Canopy Growth has operations in
eight countries across five continents. The Company is proudly
dedicated to educating healthcare practitioners, conducting robust
clinical research, and furthering the public's understanding of
cannabis, and through its partly owned subsidiary, Canopy Health
Innovations, has devoted millions of dollars toward cutting edge,
commercializable research and IP development. Through partly owned
subsidiary Canopy Rivers Corporation, Canopy Growth is providing
resources and investment to new market entrants and building a
portfolio of stable investments in the sector. From our historic
public listing to our continued international expansion, pride in
advancing shareholder value through leadership is engrained in all
we do at Canopy Growth. For more information visit
www.canopygrowth.com
About Hiku Brands
Hiku is focused on building a portfolio of engaging cannabis
brands, unsurpassed retail experiences and handcrafted cannabis
production. With a national retail footprint led by Tokyo Smoke,
craft cannabis production through DOJA's ACMPR licensed grow,
Van der Pop's female-focused
educational platforms, and Maïtri, our Quebec based cannabis brand featuring high
quality handmade accessories, Hiku houses an industry-leading
portfolio that aims to set the bar for cannabis brands in
Canada.
Hiku's wholly-owned subsidiary, DOJA Cannabis Ltd., is federally
licensed to cultivate and sell cannabis pursuant to the ACMPR,
owning two production facilities in the heart of British Columbia's Okanagan Valley. Hiku's
subsidiary, TS Brandco Holdings Inc. ("Tokyo Smoke"), has been
conditionally awarded one of four master retail licenses in
Manitoba. Hiku also operates a
network of retail stores selling coffee, clothing and curated
accessories, across British
Columbia, Alberta and
Ontario.
Forward-looking Statement
This news release contains "forward-looking statements" within the
meaning of the United States Private Securities Litigation Reform
Act of 1995 and "forward-looking information" within the meaning of
applicable Canadian securities legislation. Often, but not always,
forward-looking statements and information 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.
Forward-looking statements or information involve known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Canopy Growth, Hiku or
their respective subsidiaries to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking statements or information contained in this
news release. These forward-looking statements include, but are not
limited to, statements relating to our expectations with respect
to: the timing and outcome of the Transaction; the anticipated
benefits of the Transaction to the parties and their respective
security holders; impact of the Transaction and anticipated growth
of the combined entity; and the anticipated timing of the
Meeting.
Risks, uncertainties and other factors involved with
forward-looking information could cause actual events, results,
performance, prospects and opportunities to differ materially from
those expressed or implied by such forward-looking information,
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; other expectations and
assumptions concerning the Transaction; and such risks contained in
Canopy Growth's annual information form dated June 28, 2018 and in Hiku's amended and restated
management's discussion and analysis for the three months ended
March 31, 2018 and filed with
Canadian securities regulators available on Canopy Growth and
Hiku's respective issuer profile on SEDAR at
www.sedar.com. Readers are cautioned that the foregoing list
of factors is not exhaustive.
In respect of the forward-looking statements and information
concerning the anticipated benefits and completion of the
Transaction and the anticipated timing for completion of the
Transaction, Canopy Growth and Hiku have provided such statements
and information in reliance on certain assumptions that they
believe are reasonable at this time. Although Canopy Growth and
Hiku believe that the assumptions and factors used in preparing the
forward-looking information or forward-looking statements in this
news release are reasonable, undue reliance should not be placed on
such information and no assurance can be given that such events
will occur in the disclosed time frames or at all. The
forward-looking information and forward-looking statements included
in this news release are made as of the date of this news release
and Canopy Growth and Hiku do not undertake an obligation to
publicly update such forward-looking information or forward-looking
information to reflect new information, subsequent events or
otherwise unless required by applicable securities laws.
There can be no assurance that the Transaction will occur, or
that it will occur on the terms and conditions contemplated in this
news release. The Transaction could be modified, restructured or
terminated. Actual results could differ materially from those
currently anticipated due to a number of factors and risks.
Completion of the Transaction is subject to a number of
conditions, including but not limited to, TSX and NYSE approval.
The Transaction cannot close until the required shareholder, court
and regulatory approval is obtained. There can be no assurance that
the Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the
management information circular to be prepared in connection with
the Meeting, any information released or received with respect to
the Transaction may not be accurate or complete and should not be
relied upon.
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SOURCE Canopy Growth Corporation