- Canopy Growth's brands, technology and know-how is
anticipated to provide Acreage with a significant and immediate
advantage in an increasingly competitive U.S. market and fuel
Acreage's growth.
- Acreage shareholders to receive immediate upfront cash
consideration, on an as-converted to Subordinate Voting Share
basis, of approximately US$2.51 -
$2.63 per share upon the initial
implementation of the Transaction. On completion of the
Transaction, each Acreage share will be converted into 0.5818 of a
common share of Canopy Growth, subject to any required adjustments.
This represents a premium of approximately 40% over the 30-day
volume weighted average trading price of the Subordinate Voting
Shares on the CSE ended April 17,
2019 (based on estimated cash option premium of US$2.55 per Subordinate Voting Share on an
as-converted basis, as at the time the Arrangement Agreement was
entered into).
- Acreage shareholders will benefit from Acreage's ability to
achieve its growth strategy with reduced cost of capital based on
Canopy Growth affiliation.
- Canopy Growth shareholders will benefit from accelerated and
turnkey access to the U.S. cannabis market upon the closing,
following the Triggering Event.
- Management of both firms believe they will create greater
shareholder value together than as competitors in the U.S.
SMITHS FALLS, ON and
NEW YORK, May 23, 2019 /PRNewswire/ - Canopy Growth
Corporation ("Canopy Growth") (TSX: WEED) (NYSE: CGC) and
Acreage Holdings, Inc. ("Acreage") (CSE: ACRG.U) (OTC:
ACRGF) (FSE: 0ZV) (together, the "Companies") are pleased to
announce that they have filed their respective management
information circulars and related voting materials in relation to
the previously announced proposed acquisition of Acreage by Canopy
Growth (the "Transaction"), pursuant to a court
approved arrangement under the Business Corporations Act
(British Columbia) (the
"Arrangement").
Completion of the Transaction is contingent on the occurrence or
waiver of changes in U.S federal law to permit the general
cultivation, distribution, and possession of marijuana or to remove
the regulation of such activities from the federal Laws of
the United States (the
"Triggering Event"). Canopy Growth is permitted to waive the
Triggering Event and intends to do so as soon as the policies of
the New York Stock Exchange ("NYSE") and/or the Toronto
Stock Exchange ("TSX") permit completion of the acquisition,
provided that completion would not violate any third-party
agreements, including those entered into by Canopy Growth with
Constellation Brands, Inc.
The respective special meetings of shareholders of Canopy Growth
and Acreage to approve various resolutions in connection with the
Transaction are each scheduled to be held on June 19, 2019.
The resolution adopting the Arrangement (the "Arrangement
Resolution") must be approved by at least 66⅔% of the votes
cast by the holders of Acreage shares, voting together as a single
class. In addition, the Arrangement Resolution is subject to
approval by a simple majority (the "Minority Approval") of
the votes cast by the holders of Class A subordinate voting shares
(the "Subordinate Voting Shares") and Class B proportionate
voting shares (the "Proportionate Voting Shares"), voting
together as a single class, excluding the votes in respect of
Acreage Shares which are owned, held, controlled or directed by
Kevin Murphy, Chief Executive
Officer of Acreage.
The Companies believe that the Transaction will deliver
significant benefits that will help accelerate the growth of
Acreage across the United States
powered by the expertise of the world's leading cannabis company.
In turn, Canopy Growth shareholders will benefit from a national
turnkey platform in the U.S.
The aggregate consideration payable pursuant to the Arrangement
will vary depending upon the trading price of the common shares of
Canopy Growth. A range of potential transaction values is set out
in the following table:
Trading Price
of Canopy
Growth
Shares
|
|
Exchange Ratio
Component
|
|
Option Premium
Component(1)
|
|
Implied Price
per
Subordinate
Voting Share
|
|
Transaction
Value(1)
|
US$45.00
|
|
US$26.18
|
|
US$2.51
|
|
US$28.69
|
|
US$3.7121B
|
|
US$26.18
|
|
US$2.63
|
|
US$28.81
|
|
US$3.7276B
|
US$50.00
|
|
US$29.09
|
|
US$2.51
|
|
US$31.60
|
|
US$4.0885B
|
|
US$29.09
|
|
US$2.63
|
|
US$31.72
|
|
US$4.1040B
|
US$55.00
|
|
US$32.00
|
|
US$2.51
|
|
US$34.51
|
|
US$4.4648B
|
|
US$32.00
|
|
US$2.63
|
|
US$34.63
|
|
US$4.4804B
|
US$60.00
|
|
US$34.91
|
|
US$2.51
|
|
US$37.42
|
|
US$4.8412B
|
|
US$34.91
|
|
US$2.63
|
|
US$37.54
|
|
US$4.8567B
|
US$65.00
|
|
US$37.82
|
|
US$2.51
|
|
US$40.33
|
|
US$5.2176B
|
|
US$37.82
|
|
US$2.63
|
|
US$40.45
|
|
US$5.2331B
|
_____________________
|
(1) Based on the
number of issued and outstanding securities of Acreage, including
securities convertible, exchangeable or redeemable for Subordinate
Voting Shares on May 16, 2019.
|
For Canopy Growth, the transaction presents a clear path to
enter the U.S. market with a company that already delivers national
scale, as well as a management and operations team led by a group
of seasoned executives that deliver expertise and has driven the
vision and execution of Acreage's impressive national footprint of
licensed and managed assets.
The boards of directors of both Canopy Growth and Acreage
unanimously support the Transaction and, other than directors who
abstained from voting on the Transaction, each recommend that their
respective shareholders vote FOR the various resolutions at the
respective special meetings of shareholders of Canopy Growth and
Acreage.
The Canopy Growth and Acreage management information circulars
outline the benefits for each set of respective shareholders and
the risks related thereto and provide details about the
Transaction, including details on how shareholders can vote their
Canopy Growth and Acreage Shares, as applicable. The management
information circulars will be mailed to shareholders and are
available on Canopy Growth's and Acreage's respective issuer
profiles on SEDAR at www.sedar.com.
Benefits to Acreage Shareholders
If the Arrangement is implemented, Acreage shareholders will
receive a significant upfront cash payment of approximately
US$2.51 - US$2.63 per Subordinate Voting Share (with
holders of other classes of Acreage Shares being entitled to an
amount determined on an as-converted to Subordinate Voting Share
basis) and are expected to benefit from accelerated expansion,
improved scale, and a stronger market position in the U.S. In
an industry poised for rapid growth, Acreage believes benefits will
accrue to those who are prepared to move first. The opportunity to
combine efforts with the industry's largest and best-capitalized
global player enables Acreage to deliver both immediate value to
shareholders as well as long-term benefits alongside Canopy
Growth.
Upon completion of the Transaction, all outstanding Acreage
shares will be converted to Subordinate Voting Shares and Acreage
shareholders will receive 0.5818 of a common share of Canopy Growth
for every Subordinate Voting Share held, subject to adjustment in
certain circumstances as detailed in Acreage's management
information circular. This is anticipated to enable Acreage
shareholders to participate in the future growth of Canopy Growth
both during the interim period prior to the completion of the
Transaction as well as following the completion of the
Transaction.
Reasons to vote in favor of the Arrangement Resolution
include:
- 1 + 1 = Global leadership: Joining forces
today provides for a strategic advantage greater than either
company could build alone. If completed, the
Transaction is expected to result in the integration of Acreage, a
premier U.S. cannabis company, with Canopy Growth, a leading
international cannabis company with a global portfolio. Acreage and
Canopy Growth's aligned strategic vision and operating philosophy,
as well as complementary assets, distribution networks, products
and capabilities, is anticipated to create a pre-eminent cannabis
company across all significant regulated jurisdictions.
- Provides an attractive premium to shareholders.
Acreage shareholders are expected to receive cash consideration, on
an as-converted to Subordinate Voting Share basis, of approximately
US$2.51 - $2.63 per Subordinate Voting Share upon the
initial implementation of the Transaction. On completion of the
Transaction, each Acreage share will be exchanged for 0.5818 of a
common share of Canopy Growth, subject to any required adjustments.
This represents a premium of approximately 40% over the 30-day
volume weighted average trading price of the Subordinate Voting
Shares on the CSE ended April 17,
2019 based on the 30-day volume weighted average trading
price of the Canopy Growth shares on the NYSE on April 17, 2019 (based on cash consideration of
US$2.55 per Subordinate Voting Share
on an as-converted basis, as at the time the Arrangement Agreement
was entered into).
- Access to industry-leading brand and intellectual
property. Acreage and its affiliates will benefit from
a license agreement that provides access to Canopy Growth's
operational expertise, trademarks, logos, and intellectual
property.
- Minimizes Acreage's execution risk and crystallizes
value. Shareholders will be entitled to receive a
specified number of Canopy Growth shares for each Acreage share
held at the time of the acquisition, minimizing Acreage execution
risk going forward and linking the value of Acreage shares to
Canopy Growth shares. Given the increasingly competitive nature of
the U.S. cannabis market, as well as the inherent uncertainty of a
fast growing and evolving industry, this substantially mitigates
these uncertainties and risks resulting therefrom.
- Bolsters Acreage's ability to continue to aggressively
pursue growth plans. Acreage can issue up to 58 million
Subordinate Voting Shares, that, if the Canopy Growth Call Option
(as defined in the Acreage management information circular) is
exercised, will become future Canopy Growth shares, which is
expected to further accelerate Acreage's ability to fund organic
and rapid expansion using Acreage shares.
- Increased liquidity for shareholders. Upon
completion of the Transaction, Acreage shareholders will receive
Canopy Growth shares, which are currently listed for trading on the
TSX and the NYSE, which is anticipated to provide greater liquidity
given the higher daily trading volumes.
Shareholders of Acreage are encouraged to visit
http://investors.acreageholdings.com/Acreage-Canopy-Deal for
additional resources and voting information.
Benefits to Canopy Growth Shareholders
For Canopy Growth shareholders, the Transaction represents a
clear path for Canopy Growth to enter the U.S. cannabis market,
when federally-permissible, will introduce its brands and consumer
products in the United States.
Reasons to vote in favor of the Transaction include:
- 1 + 1 = Global leadership:
Proven management with access to Canopy's existing recipe for
success will build an unmatched position into the key US
market. Upon completion of the Transaction, the addition of
Acreage's U.S. operations — including their cannabis cultivation,
processing, and retail infrastructure— to Canopy Growth's current
operations in over a dozen countries on five continents, is
expected to create a preeminent global cannabis company.
- Accelerating access to the U.S. cannabis
market. Acreage's growing footprint in the U.S. will
give Canopy Growth a tremendous opportunity to secure significant
market share.
- Generating awareness of Canopy Growth's brands in the
U.S. The Transaction is expected to introduce Canopy
Growth's diversified portfolio of cannabis brands, including
Tweed® and Tokyo SmokeTM across the United States. Select retail locations
under the Tweed® and Tokyo SmokeTM monikers
are expected to build Canopy Growth's brand recognition in the U.S.
market.
- Developing U.S. demand for Canopy Growth's cannabis-based
consumer products. Acreage will gain access to Canopy
Growth's intellectual property enabling it to distribute
proprietary cannabis-based consumer products in the U.S. including
vape-filing and beverage products.
Shareholders of Canopy Growth are encouraged to visit
https://www.canopygrowth.com/canopy-acreage-deal/ for additional
resources and voting information.
Becoming a Voter is Fast and Easy
Even if you have never voted before, every vote will count no
matter how many shares you own.
Shareholders of both Companies must vote their proxies before
10:00 a.m. (EST) on June 17, 2019.
For Acreage Shareholders with Questions or Requiring Help
Voting:
Contact Kingsdale Advisors at 1-866-229-8651 toll-free (within
North America) or 1-416-867-2272
(for collect calls outside North
America), or by email at
contactus@kingsdaleadvisors.com.
For Canopy Growth Shareholders with Questions or Requiring
Help Voting:
Contact Kingsdale Advisors at 1-866-581-1392 toll-free (within
North America) or 1-416-867-2272
(for collect calls outside North
America) or by email at contactus@kingsdaleadvisors.com.
Advisors
Cassels Brock & Blackwell LLP
and Paul Hastings LLP acted as legal counsel to Canopy Growth.
PricewaterhouseCoopers LLP (Canada) acted as finance advisor to Canopy
Growth. Ernst & Young LLP (EY) acted as tax
advisors to Canopy Growth. Greenhill & Co. Canada Ltd.
provided an independent fairness opinion to the board of directors
of Canopy Growth.
DLA Piper (Canada) LLP and
Cozen O'Connor acted as legal counsel to Acreage. Canaccord Genuity
Corp. acted as financial advisor to Acreage and provided a fairness
opinion to the board of directors of Acreage. Stikeman Elliott
LLP acted as legal counsel and INFOR Financial Inc. provided
an independent fairness opinion to a special committee of
independent directors of Acreage.
Kingsdale Advisors is acting as strategic shareholder and
communications advisor and proxy solicitation agent to both Canopy
Growth and Acreage.
Additional Details
For a more detailed description of the Transaction, readers
should review the Canopy Growth and Acreage management information
circulars.
About Canopy Growth
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. Canopy Growth offers
medically approved vaporizers through its subsidiary, Storz &
Bickel GMbH & Co. KG. 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
operations in over a dozen countries across five continents.
Canopy Growth is proudly dedicated to educating healthcare
practitioners, conducting robust clinical research, and furthering
the public's understanding of cannabis, and through its wholly
owned subsidiary, Canopy Health Innovations, has devoted millions
of dollars toward cutting edge, commercializable research and IP
development. Canopy Growth works with the Beckley Foundation and
has launched Beckley Canopy Therapeutics to research and develop
clinically validated cannabis-based medicines, with a strong focus
on intellectual property protection. Canopy Growth acquired assets
of leading hemp research company, ebbu, Inc. ("ebbu"). Intellectual
Property ("IP") and R&D advancements achieved by ebbu's team
apply directly to Canopy Growth's hemp and THC-rich cannabis
genetic breeding program and its cannabis-infused beverage
capabilities. Through partly owned subsidiary Canopy Rivers Inc.,
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 on the Toronto Stock Exchange
and New York Stock Exchange to our continued international
expansion, pride in advancing shareholder value through leadership
is engrained in all we do at Canopy Growth. Canopy Growth has
established partnerships with leading sector names including
cannabis icon Snoop Dogg, breeding legends DNA Genetics and Green
House seeds, Battelle, the world's largest nonprofit research and
development organization, and Fortune 500 alcohol leader
Constellation Brands, to name but a few. Canopy Growth operates ten
licensed cannabis production sites with over 4.4 million square
feet of production capacity, including over 500,000 square feet of
GMP certified production space. For more information
visit www.canopygrowth.com.
About Acreage
Headquartered in New York City,
Acreage is the largest vertically integrated, multi-state owner of
cannabis licenses and assets in the U.S. with respect to the number
of states with cannabis related licenses, according to publicly
available information. Acreage owns licenses to operate or
has management services or consulting agreements in place with
license holders to assist in operations in 20 states (including
pending acquisitions) with a population of approximately 180
million Americans, and an estimated 2022 total addressable market
of more than $17 billion in legal
cannabis sales, according to Arcview Market Research. Acreage
is dedicated to building and scaling operations to create a
seamless, consumer-focused branded cannabis experience.
Acreage's national retail store brand, The Botanist, debuted in
2018.
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,
Acreage 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 the Companies'
expectations with respect to: the timing and outcome of the
Transaction; the intention of Canopy Growth to waive the Triggering
Event as soon as the policies of the NYSE and/or the TSX permit
completion of the acquisition; the anticipated benefits of the
Transaction to the Companies and their respective securityholders;
and the impact of the Transaction and anticipated growth of the
Companies.
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 ability of the parties to receive,
in a timely manner and on satisfactory terms, the necessary
regulatory, court and shareholder approvals; the ability of the
parties to satisfy, in a timely manner, the other conditions; the
occurrence or waiver of the Triggering Event; the ability of the
Companies to satisfy, in a timely manner, the conditions to closing
following the occurrence or waiver of the Triggering Event; other
expectations and assumptions concerning the Transaction; and such
risks contained in the management information circulars of Canopy
Growth and Acreage dated May 17,
2019, in Canopy Growth's annual information form dated
June 28, 2018 and in Acreage's annual
information form dated April 24, 2019
and filed with Canadian securities regulators available on Canopy
Growth and Acreage's respective issuer profiles 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 Acreage have provided such
statements and information in reliance on certain assumptions that
they believe are reasonable at this time. Although Canopy Growth
and Acreage 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 Acreage 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, including the
Triggering Event, 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.
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 circulars to be prepared in connection with
the Transaction, any information released or received with respect
to the Transaction may not be accurate or complete and should not
be relied upon.
The Canadian Securities Exchange has not reviewed, approved or
disapproved the content of this news release.
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SOURCE Canopy Growth Corporation