Cannabis Weekly Round-Up: Canadian M&A Heats Up

In the evolving rush of mergers and acquisitions (M&A) in the Canadian cannabis market, Canopy Growth (NASDAQ:CGC,TSX:WEED) announced it will acquire The Supreme Cannabis Company (TSX:FIRE,OTCQX:SPRWF) in a deal worth approximately C$435 million.

Meanwhile, a cannabis operator in the US confirmed this week that it will receive a financial boost from a partner to solidify its position in the burgeoning Pennsylvania state market.

Keep reading to find out more cannabis highlights from the past five days.

Supreme run ends with Canopy acquisition

Canopy’s deal to acquire Supreme is being viewed as a way for Canopy to add to its international presence, since Supreme offers valuable assets in Europe and in the coveted US marketplace.

As part of the transaction, each Supreme shareholder will receive 0.01165872 of a Canopy common share and $0.0001 in cash.

The deal comes on the heels of a recent spate of M&A in the Canadian cannabis space. Experts have repeatedly told the Investing News Network that Canadian cannabis operators are consolidating alongside a critical need to strengthen their presence in the US.

Beena Goldenberg, president and CEO of Supreme, said Canopy was also emboldened by the potential of buying a brand like 7ACRES as part of the whole deal. “Combining Supreme Cannabis with Canopy — a Canadian market leader with exposure to the United States — presents a significant value creation opportunity for both companies,” the executive said in a statement.

For his part, Canopy CEO David Klein justified his position by telling the Financial Post that this acquisition will leave Canopy with C$2.5 billion of cash on its balance sheet.

“It allows us to create the really strong, home-market anchor point that we want for Canopy, which allows us to invest in our consumer more than anybody else and create products that excite our consumers,” he explained to the news outlet.

Jushi looking to expand Pennsylvania play

Jushi Holdings (CSE:JUSH,OTCQB:JUSHF) will receive an additional US$30 million for the expansion of a cultivation facility in Scranton, Pennsylvania.

The funds will be delivered by cannabis real estate investment trust Innovative Industrial Properties (IIP) (NYSE:IIPR), with which Jushi was already in a business relationship as part of an original lease for the development of the facility.

“We appreciate the strong support of IIP as a long-term real estate capital partner, teaming with us to provide strategic real estate capital at an opportune time for our continued expansion in Pennsylvania,” said Jim Cacioppo, CEO, chairman and founder of Jushi.

Jushi told investors it expects to see the first phase of the expansion completed by Q4 2021; it will add 26,000 square feet of canopy at a cost of US$40 million. The second phase of the expansion will begin its buildout in Q3 2021 for an estimated cost of between US$25 million and US$30 million.

Cannabis company news

• Curaleaf Holdings (CSE:CURA,OTCQX:CURLF) announced that in an effort to expand its global initiatives, it has obtained a US$130 million investment from an undisclosed “single strategic institutional investor.” The sum will be received in exchange for a 31.5 percent equity stake in Curaleaf International, a new international division of the company. “Building on our market leading position in the U.S., this transaction establishes Curaleaf as the global, pure play, cannabis market leader by revenue and geographic reach,” Curaleaf Executive Chairman Boris Jordan said.

• Organigram Holdings (NASDAQ:OGI,TSX:OGI)informed investors it will acquire soft chew manufacturer The Edibles & Infusions Corporation in a deal worth C$22 million, in addition to C$13 million in shares. This deal follows the investment infusion that Organigram received from its deal with British American Tobacco (NYSE:BTI,LSE:BATS).

• Trulieve Cannabis (CSE:TRUL,OTCQX:TCNNF)confirmed an acquisition plan for the dispensary license holder of Pennsylvania-based Keystone Shops. The deal will see Trulieve gain management of 83 dispensaries after payment of US$60 million, which will be divvied up between US$40 million in Trulieve shares and US$20 million in cash.

• Aphria (NASDAQ:APHA,TSX:APHA)issued a reminder to investors about a critical upcoming vote next Wednesday (April 14) regarding its arrangement with Tilray (NASDAQ:TLRY). “We believe this business combination further strengthens our global business and capabilities, creating a Combined Company with a robust financial profile, low-cost production, leading brands, distribution network and unique partnerships, and positions us to deliver sustainable value for all stakeholders for many years to come,” Aphria Chairman and CEO Irwin Simon said.

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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.