Canopy announces plan to buy Supreme for $435m in stock and cash

| Staff

Canopy announced today an agreement to buy Supreme Cannabis for $435 million in stock and cash. The deal gives Canopy control of the successful 7ACRES brand and control of what Canopy says will be 13.6% of the Canadian non-medical cannabis market.

Under the terms of the Arrangement Agreement, Supreme Cannabis shareholders will receive 0.01165872 of a Canopy common share and $0.0001 in cash in exchange for each Supreme Cannabis Share held. 

The Transaction provides Supreme Cannabis shareholders with a premium per Supreme Cannabis Share of approximately 66% based on the closing prices of the Supreme Cannabis Shares and Canopy common shares on the Toronto Stock Exchange (the “TSX”) as of April 7, 2021.

Supreme first received their licence to cultivate in 2016. The move helps bolster Canopy’s position in the market as #2 in total revenue and market share.

“As we continue to expand our leading brand portfolio, we’re excited to reach more consumers through Supreme’s premium brands and high-quality products, further solidifying Canopy’s market leadership,” said David Klein, Chief Executive Officer of Canopy. “Supreme’s deep commitment to superior genetics, top-tier cultivation and strict quality control, paired with Canopy’s leading consumer insights, advanced R&D and innovation capabilities, is expected to create a powerful combination that aligns with our strategic focus to generate growth with premium quality products across key categories.”

“This transaction is a testament to the value created by all the teams at Supreme and will be beneficial to all of our stakeholders,” added Beena Goldenberg, President and CEO of Supreme Cannabis. “We have been successful at delivering great products that achieved strong customer loyalty, and operating at levels of efficiency that are industry-leading. We have also built a highly sought-after premium brand in 7ACRES. Combining Supreme Cannabis with Canopy – a Canadian market leader with exposure to the United States – presents a significant value creation opportunity for both companies. We look forward to working with Canopy to complete this transaction.”

The move comes on the heels of a recent announcement of Canopy also purchasing Ontario based cannabis brand Ace Valley. Last month, Canopy announced it had borrowed $750 million (US) from a private equity group, which is helping fund these acquisitions.

New Brunswick LP Organigram recently purchased the Manitoba-based Edibles & Infusions Corporation from AgraFlora Organics International Inc. for $22-million, plus up to an additional $13-million in shares payable upon the EIC business achieving certain earnout milestones.