Constellation Brands Enters Into Agreement with Canopy Growth Corporation to Modify Warrants and Other Rights
April 18 2019 - 9:33AM
Constellation Brands, Inc. (NYSE: STZ and STZ.B), a leading
beverage alcohol company, today announced that it plans to enter
into an agreement with Canopy Growth Corporation (“Canopy”) (TSX:
WEED, NYSE: CGC), a leading diversified cannabis company, to modify
certain warrants and other rights. These changes are the
result of Canopy’s intentions to acquire Acreage Holdings, Inc.
(“Acreage”) upon U.S. Federal cannabis legalization.
Earlier today, Canopy announced (see Canopy
press release “Canopy Growth Announces Option to Acquire Leading
U.S. Multi-state Cannabis Operator, Acreage Holdings”) it has
entered into an agreement with Acreage, a U.S. multi-state cannabis
operator, where Canopy plans to acquire the shares of Acreage upon
U.S. Federal cannabis legalization (the “Triggering Event”),
subject to certain conditions. This transaction, as well as
proposed modifications to certain Constellation warrants, are
subject to approval by Canopy shareholders. Constellation has
agreed to waive its veto rights to this transaction subject to
certain proposed modifications to the warrants and other conditions
as outlined below:
• |
In addition to the 18.9
million warrants associated with the November 2017 Canopy
investment, Constellation also currently has 139.7 million warrants
in Canopy, which upon shareholder approval would become exercisable
over a period of five to eight years from November 1, 2018,
compared to the previous three-year period. This includes
88.5 million Tranche A warrants, which are exercisable at a
price per share of C$50.40 and 51.2 million Tranche B
warrants, of which 38.4 million, or 75 percent, are
exercisable at a price per share of C$76.68. The remaining
25 percent of the original Tranche B warrants will become
Tranche C warrants and will be exercisable at Canopy’s five-day
volume weighted average price of the common shares on the Toronto
Stock Exchange (“VWAP”) immediately prior to exercise. If
Canopy exercises its right to acquire the shares of Acreage and
Constellation were to exercise all of their outstanding Canopy
warrants, Constellation’s ownership in Canopy is not expected to
exceed 50 percent. |
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Current Warrants |
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Revised Warrants |
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Expiry Date |
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Shares |
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Price |
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Expiry Date |
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Shares |
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Price |
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Tranche A warrants |
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Nov. 1, 2021 |
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88.5 M |
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C$50.40 |
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Nov. 1, 2023 |
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88.5 M |
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C$50.40 |
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Tranche B warrants |
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Nov. 1, 2021 |
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51.2 M |
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VWAP (1) |
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Nov. 1, 2026 |
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38.4 M |
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C$76.68 (2) |
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Tranche C warrants |
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-- |
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Nov. 1, 2026 |
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12.8 M |
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VWAP (1) |
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(1) |
Five-day VWAP
of Canopy common shares on the Toronto Stock Exchange immediately
prior to exercise |
(2) |
75 percent of
original Tranche B warrants priced at Canopy stock 52-week
high |
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• |
If
Constellation exercises Tranche A warrants in full, Canopy has
committed to repurchase the lesser of 25 percent of its issued
shares to Acreage or a dollar amount equal to 25 percent of
the implied enterprise value of Acreage within 24 months of the
date of Constellation’s warrant exercise. |
• |
Constellation
would be permitted to purchase up to 20 million Canopy shares
in the open market prior to the warrants being exercised or
terminated, provided that for each share purchased by
Constellation, the number of Tranche B warrants is decreased
by one. |
• |
Constellation
will continue to maintain its current level of representation on
Canopy’s Board of Directors. |
About Constellation BrandsConstellation 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 beer brands such as the Corona and Modelo brand
families and Pacifico. Its high-quality, wine and spirits brands
include the Robert Mondavi and The Prisoner Wine Company brand
families, Kim Crawford, Ruffino, Meiomi and SVEDKA Vodka. The
company’s portfolio also includes a collection of highly-rated,
wine brands such as SIMI and Mount Veeder Winery wine brands, High
West Whiskey and Casa Noble Tequila, as well as new wine
innovations such as Cooper & Thief and Spoken Barrel.
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. Since its founding in 1945, Constellation’s
ability to see, meet and stay ahead of shifting consumer
preferences and trends across total beverage alcohol has fueled our
success and made us the No. 1 growth contributor in beverage
alcohol in the U.S.
To learn more, follow us on Twitter @cbrands and visit
www.cbrands.com.
Forward-Looking StatementsThis news release
contains forward-looking statements. All statements other than
statements of historical fact are forward-looking statements. The
word “expect” 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, and
plans and objectives of management, as well as information
concerning future ownership levels in Canopy and expected actions
of third parties, including but not limited to Canopy’s potential
transaction with Acreage and Canopy’s potential repurchase of
shares issuable in that potential transaction. 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. All forward-looking
statements speak only as of the date of this news release and
Constellation Brands undertakes no obligation to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise. The proposed revision of
the warrants held by certain Constellation subsidiaries in Canopy
(the “Warrants Revision”) is subject to various conditions,
including approval by Canopy shareholders.
Any transaction between Acreage and Canopy would also be subject
to various conditions. There can be no assurance either that
Canopy’s shareholders will approve the proposed Warrants Revision
or the intended transaction with Acreage. There also can be no
assurance that any transaction between Canopy and Acreage will
occur or that the Triggering Event of Canopy’s intended transaction
with Acreage will occur.
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 the accuracy of all projections and other factors and
uncertainties disclosed from time-to-time in the company’s filings
with the Securities and Exchange Commission, including its Annual
Report on Form 10-K for the fiscal year ended
February 28, 2018, as supplemented by the company’s Quarterly
Report on Form 10-Q for the fiscal quarter ended
August 31, 2018, which could cause actual future performance
to differ from current expectations.
MEDIA CONTACTS |
INVESTOR RELATIONS CONTACTS |
Mike McGrew |
773-251-4934 |
michael.mcgrew@cbrands.com |
Patty Yahn-Urlaub |
585-678-7483 |
patty.yahn-urlaub@cbrands.com |
Amy
Martin |
585-678-7141 |
amy.martin@cbrands.com |
Bob
Czudak |
585-678-7170 |
bob.czudak@cbrands.com |
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Tom
Conaway |
585-678-7503 |
thomas.conaway@cbrands.com |
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A downloadable PDF copy of this news release enhanced with
multimedia links can be found
here: http://ml.globenewswire.com/Resource/Download/729bff5c-bca9-4a8a-90e1-5ff4c9ab8fb2
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