Expands Strategic Partnership to Accelerate
Canopy Growth's Global Expansion Plans in
Rapidly-Growing Medical and Recreational Cannabis
Markets
VICTOR, NY and SMITHS FALLS, ON, Aug.
15, 2018 /PRNewswire/ - Constellation Brands (NYSE:
STZ) (NYSE: STZ.B), a leading beverage alcohol company, and
Canopy Growth Corporation (Canopy Growth) (TSX: WEED) (NYSE: CGC),
a leading diversified cannabis company (together, the "Companies"),
today announced a significant expansion of their strategic
partnership to position Canopy Growth as the global leader in
cannabis production, branding, intellectual property and
retailing.
Constellation Brands will increase its ownership interest in
Canopy Growth by acquiring 104.5 million shares directly from
Canopy Growth, thereby achieving approximately 38 percent ownership
when assuming exercise of the existing Constellation
warrants. Constellation Brands is acquiring the new shares at
a price of C$48.60 per share, which
is a 37.9 percent premium to Canopy's 5-day volume weighted average
price of the common shares on the Toronto Stock Exchange ("VWAP"),
and a 51.2 percent premium to the closing price on August 14, 2018. Constellation will also
receive additional warrants of Canopy that, if exercised, would
provide for at least an additional $4.5
billion CAD to Canopy Growth.
As a result of the new shares Constellation is acquiring, Canopy
Growth will immediately upon closing have proceeds of approximately
$5 billion CAD [$4 billion USD] to bolster its leadership
position in the global cannabis industry. This investment,
the largest to date in the cannabis space, will provide funds which
Canopy Growth will deploy to strategically build and/or acquire key
assets needed to establish global scale in the nearly 30 countries
pursuing a federally permissible medical cannabis program, while
also rapidly laying the global foundation needed for new
recreational cannabis markets. Canopy Growth's Canadian
platform does not require additional cannabis cultivation assets,
and management views other jurisdictions, including the United States, as strategic priorities
requiring significant capital.
"Through this investment, we are selecting Canopy Growth as our
exclusive global cannabis partner," said Rob Sands, Chief Executive Officer,
Constellation Brands. "Over the past year, we've come to
better understand the cannabis market, the tremendous growth
opportunity it presents, and Canopy's market-leading capabilities
in this space. We look forward to supporting Canopy as they
extend their recognized global leadership position in the medical
and recreational cannabis space."
Canopy Growth will benefit from Constellation's deep
understanding of consumer trends and shifting preferences, and
proven ability to translate those insights into distinct brand
positionings that build strong connections with consumers and
foster brand loyalty. Constellation's disciplined approach
and capabilities in areas such as mergers and acquisitions,
finance, large-scale production, marketing and sales as a leading
Fortune 500 company, combined with Canopy's entrepreneurial
approach and best-in-class knowledge and expertise within the
emerging cannabis sector create a powerful combination that will
ensure Canopy Growth is set up for sustainable, long-term success
as the company and sector evolve.
Founded in 2013, Canopy Growth has cemented itself as the
industry leader in Canada's legal
cannabis market. Through its subsidiaries Tweed and Spectrum
Cannabis, Canopy Growth has established a global presence in 11
countries which is driven by product innovation, a robust
intellectual property portfolio, and clinical research programs
targeting both human and animal health. In Canada, Canopy Growth has established
sophisticated operations to support recreational sales by raising
capital and making the strategic investments required to maintain
and accelerate its market leadership position at a critical time in
the company's evolution. Substantial capital is required to
fully capitalize on Canopy Growth's market-leading position in
Canada and establish similar
leading positions in markets around the globe.
"Our business can now make the strategic investments required to
accelerate our market position globally," said Bruce Linton, Chairman and Co-CEO, Canopy
Growth. "Constellation's concentration of global cannabis
activities exclusively through Canopy, coupled with the
investment and its expert capabilities in brand-building,
marketing, consumer insights and M&A will be a huge benefit as
we look to expand our portfolio in Canada, the United
States and emerging cannabis markets around the globe.
We view this investment in our business as an endorsement of our
execution since forming our initial strategic relationship in
October 2017."
As part of the proposed transaction, Constellation will nominate
four directors to Canopy Growth's seven-member Board of Directors,
Chaired by Founder Bruce
Linton. Canopy Growth will remain a proudly Canadian
publicly-traded company headquartered in Smiths Falls, Ontario, Canada and will
continue to be led by its existing management team, who will
continue to manage all international cannabis operations.
As part of its investment, Constellation is receiving 139.7
million new warrants which are exercisable over the next 3
years. Of those, 88.5 million are exercisable at a price per
share of C$50.40, a 43.0 percent
premium to Canopy's VWAP, and 51.3 million are exercisable at the
VWAP at the time of exercise. If Constellation were to
exercise all existing and new warrants, its ownership would exceed
50 percent.
Canopy Growth's future plans include pursuing various product
formats in all cannabis channels. Both companies have no
plans to sell cannabis products in any market unless it is
permissible to do so at all applicable government levels.
Canopy Growth remains committed to not entering the U.S. market in
any manner that would contravene U.S. federal laws.
Constellation expects to account for its investment under the
equity accounting method. As such, the transaction is
expected to be accretive to the company's full year diluted
earnings per share in fiscal 2021. In addition, Constellation
Brands remains committed to its investment grade rating and
therefore, has no plans to engage in mergers, acquisitions or share
repurchase activity until the company returns to its 3.5x leverage
target, which is expected to occur within 18-24 months of deal
closing.
The transaction is subject to customary closing conditions,
including Canopy shareholder approval and applicable Canadian
government and regulatory approvals, and is expected to close by
the end of October 2018. Goldman Sachs advised Constellation
Brands and Bank of America Merrill Lynch is providing committed
financing for this transaction. Greenhill & Co. Canada
Ltd. acted as exclusive financial advisor to Canopy Growth.
Kingsdale Advisors is acting as strategic shareholder
communications advisor and proxy solicitation agent to Canopy
Growth.
Canopy Growth shareholders should contact Kingsdale Advisors
at 1-877-657-5857.
Or collect outside North America
at 1-416-867-2272 or by email
at contactus@kingsdaleadvisors.com.
Canopy Growth Chairman and Co-CEO Bruce
Linton and Constellation Brands CEO Rob Sands will provide further commentary on
this expanded partnership at the beginning of Canopy Growth's
earnings call to be held today at 8am
Eastern Time.
Webcast Information:
A live audio webcast will be
available at:
https://event.on24.com/wcc/r/1800764/F7B6A3CFF26AED5C28B555A658CF1105
Calling Information:
Toll Free Dial-In Number:
1-888-231-8191
International Dial-In Number (647) 427-7450
Conference ID: 4984819
Replay Information:
A replay of the call will be
accessible by telephone until 11:59 PM
ET on November 13, 2018.
Toll Free Dial-in Number: 1-855-859-2056
Replay Password: 4984819
About Constellation Brands
Constellation Brands
(NYSE: STZ and STZ.B), a Fortune 500® company, is a leading
international producer and marketer of beer, wine and spirits with
operations in the U.S., Mexico,
New Zealand, Italy and Canada. Constellation is the No. 3 beer
company in the U.S. with high-end, iconic imported brands such as
Corona Extra, Corona Light, Modelo
Especial, Modelo Negra and Pacifico. The company's beer portfolio
also includes Ballast Point, one of the most awarded craft brewers
in the U.S., and Funky Buddha Brewery. In addition, Constellation
is the world leader in premium wine, selling great brands that
people love, including Robert
Mondavi, Clos du Bois, Kim
Crawford, Meiomi, Mark West,
Black Box, Ruffino and The Prisoner. The company's premium spirits
brands include SVEDKA Vodka, Casa Noble Tequila and High West
Whiskey.
Based in Victor, N.Y., the
company believes that industry leadership involves a commitment to
brand building, our trade partners, the environment, our investors
and to consumers around the world who choose our products when
celebrating big moments or enjoying quiet ones. Founded in 1945,
Constellation has grown to become a significant player in the
beverage alcohol industry with more than 100 brands in its
portfolio; about 40 wineries, breweries and distilleries; and
approximately 10,000 talented employees. We express our company
vision: to elevate life with every glass raised. To learn more,
follow us on Twitter @cbrands and visit www.cbrands.com.
About Canopy Growth Corporation
Canopy Growth (TSX:
WEED) is a world-leading diversified cannabis company, offering
distinct brands and curated cannabis varieties in dried, oil and
capsule forms. Through its wholly-owned subsidiaries, Canopy Growth
operates numerous state-of-the-art production facilities with over
half a million square feet of GMP-certified indoor and greenhouse
production capacity, all to an unparalleled level of quality
assurance procedures and testing. Canopy Growth has established
partnerships with leading sector names in Canada and abroad, with interests and
operations spanning four continents. The Company is proudly
dedicated to educating healthcare practitioners, providing
consistent access to high quality cannabis products, conducting
robust clinical research, and furthering the public's understanding
of cannabis. For more information visit www.canopygrowth.com.
Forward-Looking Statements
This news release contains forward-looking statements. All
statements other than statements of historical fact are
forward-looking statements. The words "expect," "intend" and
similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain
such identifying words. These statements may relate to business
strategy, future operations, prospects, plans and objectives of
management, as well as information concerning expected actions of
third parties. All forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from those set forth in, or implied by, such forward-looking
statements. The forward-looking statements are based on
management's current expectations and should not be construed in
any manner as a guarantee that such results will in fact occur or
will occur on the timetable contemplated hereby. Examples of such
statements include but are not limited to the timing and completion
of the proposed transaction, shareholder approval, and applicable
government and regulatory approvals of the proposed transaction,
anticipated use of proceeds, exercise by Constellation Brands of
any warrants, expected accounting method, future expansion efforts,
the leadership of Canopy Growth in the cannabis industry, the
impact of the transaction on Canopy Growth's market position, the
composition of Canopy Growth's management team, the location of
Canopy Growth's headquarters, future operational and production
capacity and requirements, the impact of any enhanced
infrastructure and production capabilities, future success and
anticipated available product selection. All forward-looking
statements speak only as of the date of this news release and
neither Constellation Brands nor Canopy Growth undertakes any
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
In addition to risks and uncertainties associated with ordinary
business operations, the forward-looking statements contained in
this news release are subject to other risks and uncertainties,
including completion of the announced transaction; the accuracy of
all projections; the exact elements of Constellation Brands'
permanent financing will depend upon market conditions;
Constellation's ability to achieve expected and target debt
leverage ratios and the timeframe in which the debt leverage ratio
will be achieved will depend upon actual financial performance;
circumstances may warrant that Canopy Growth use the proceeds from
the transaction for different purposes than stated above; the
expected benefits of the transaction may not materialize in the
manner or timeframe expected, or at all; and other factors and
uncertainties disclosed from time-to-time in Constellation Brands,
Inc.'s filings with the Securities and Exchange Commission,
including its Annual Report on Form 10-K for the fiscal year ended
February 28, 2018 or in Canopy
Growth's filings with the Canadian Securities Administration or
with the United States Securities Exchange Commission, including
its annual information form dated June 28,
2018, which could cause actual future performance to differ
from current expectations.
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SOURCE Canopy Growth Corporation