On Wednesday, investors from Acreage Holdings and Canopy Growth voted overwhelmingly in favor of the deal between the two firms.
Shareholders have approved a massive transaction that could create a conglomerate in the marijuana industry.
On Wednesday (June 19), investors of New York-based multi-state operator (MSO) Acreage Holdings (CSE:ACRG.U,OTCQX:ACRGF) and Canadian producer Canopy Growth (NYSE:CGC,TSX:WEED) okayed a deal between the two firms.
Canopy Growth spent US$300 million to get the option to acquire Acreage when marijuana becomes federally legal in the US. In total, the transaction is estimated to be worth US$3.4 billion.
Shareholders from both firms overwhelmingly voted in support of the deal, with 95 percent of Acreage investors and 99.05 percent of Canopy Growth holders agreeing to the outlined terms of the acquisition.
“Alongside our international market strategies and US Hemp strategy, we believe the acquisition of Acreage will be a key step in bolstering our position as a truly global company,” Bruce Linton, co-CEO of Canopy Growth, said in a press release.
Kevin Murphy, founder and CEO of Acreage, thanked shareholders for approving the deal.
Shares of the two companies enjoyed a slight jump in Wednesday’s trading session.
Shares of Canopy Growth in New York and Toronto finished the day respectively at US$42.77 and C$56.85, representing price increases of 1.74 percent and 0.87 percent, while shares of Acreage increased by 3.16 percent for a closing price of US$19.60.
Now, with voter support, shareholders will wait to see just how long it will be until Canopy Growth can complete its acquisition.
Acreage management has indicated that it will race to expand its portfolio so that once Canopy Growth can swoop in and complete the transaction, the Canadian firm will obtain a larger MSO.
After the original announcement of the deal, Alan Brochstein, cannabis analyst with 420 Investor, highlighted that the MSO will now be capable of hitting the market and finding quality partners to expand its own business.
As part of the deal, Acreage will also gain use of the brands and intellectual property held by Canopy Growth.
“We expect that potential acquisition candidates will have more confidence in the equity of Acreage given that it will be tethered to Canopy,” he said.
Steve West, vice president of investor relations at Acreage, previously told the Investing News Network that that is the plan for the MSO now: to go out and continue merger and acquisition activity.
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Editorial Disclosure: Acreage Holdings is a client of the Investing News Network. This article is not paid-for content.
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.