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Canopy Growth Corp. is not acquiring Acreage Holdings Inc., as reported by the press on Wednesday, but is preparing to spend billions to obtain the rights to purchase the American pot company.
A source familiar with the negotiations confirmed Wednesday afternoon that a canopy growth
GSC + 2.81%
CANNABIS, + 2.81%
deal with the area
ACRGF, + 9.14%
was "98% done", even though the final price was still being established. Acreage had a market capitalization of $ 2.45 billion at Wednesday's close but the deal will be worth "several billion" in Canadian dollars, the source said.
If Canopy Growth were to actually acquire Acreage, it would break the rules of the Toronto Stock Exchange, where its shares are listed. The TSX does not allow companies to hold stakes in companies that exploit illegal activities, which technically Acreage, because marijuana is still illegal in the United States in the United States. Canopy should also give up its US listing, which was taken over from the TSX. look at the Canadian securities exchange and the US over-the-counter, as do the US publicly traded companies.
Instead, Canopy Growth will purchase Acreage's purchase rights when (or if) marijuana becomes legal in the United States at an agreed price, depending on the source. Many cannabis companies in Canada have purchased mandates from companies operating in the United States, and Canopy already has some, including Slang Worldwide Inc.
SLGWF, + 1.76%
and others owned by Canopy Rivers Inc.
RIV + 10.05%
an investment subsidiary listed on the TSX Venture Exchange.
Canopy-listed US stocks jumped more than 10% after the first reports of the deal were released Wednesday afternoon, although those gains faded a little later, to about 8%. The stock closed up 2.8% on Wednesday, while the ETFMG Alternative Harvest ETF
MJ -0.15%
lost 0.2% and Horizons Marijuana Life Sciences Index ETF
HMMJ, + 1.03%
earned 1%.
This report has been updated with the market capitalization of Acreage.
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