Sector News

Constellation Brands buys stake in global cannabis grower

October 31, 2017
Consumer Packaged Goods

Alcohol giant, Constellation Brands has announced that it is to acquire a minority stake in Ontario, Canada-based Canopy Growth Corporation, a well-respected public company and the leading provider of medicinal cannabis products.

Constellation will pay around US$245 million for a 9.9 percent stake in Canopy Growth Corp., a Canadian seller of medicinal-marijuana products.

The investment and relationship are set to lend insights on the emerging cannabis market and evolving consumer trends in the cannabis market.

This investment and relationship are consistent with Constellation Brands’ long-term strategy to identify, meet and stay ahead of evolving consumer trends and market dynamics while maintaining focus on its core total beverage alcohol business. Constellation has no plans to sell any cannabis products in the US or any other market unless or until it is legally permissible to do so at all government levels.

“Canopy Growth has a seasoned leadership team that understands the legal, regulatory and economic landscape for an emerging market that is predicted to become a significant consumer category in the future,” said Constellation Brands President and Chief Executive Officer, Rob Sands. “Our company’s success is the result of our focus on identifying early-stage consumer trends, and this is another step in that direction.”

Founded in 2014, Canopy Growth Corporation is one of the earliest commercial players in Canada’s legal cannabis market. The company is currently traded on the Toronto Stock Exchange (TSX) under the symbol “WEED” and has a market cap of more than CAD$2 billion. The company owns a collection of diverse brands serving customers in Canada and international markets where medicinal cannabis products are legal. In conjunction with this investment, both companies intend to enter into an agreement to exchange knowledge and expertise.

“We are thrilled to have the backing of such a well-established and respected organization such as Constellation Brands,” said Bruce Linton, Chairman and Chief Executive Officer, Canopy Growth Corporation. “We look forward to working with the Constellation Brands team to access their deep knowledge and experience in growing brands as we continue to expand our business.”

The investment is expected to approximate CAD$245 million representing an ownership interest of 9.9 percent of Canopy Growth Corporation, plus warrants which give Constellation Brands the option to purchase an additional ownership interest in the future. The transaction is expected to close during the Company’s third quarter of fiscal 2018.

Source: Food Ingredients First

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