(Reuters) – Canadian marijuana growers Canopy Growth Corp. is about to buy Acreage Holdings, a US-based pot manufacturing company, a source familiar with the matter said on Wednesday.
FILE PHOTO: A sign bearing the Canopy Growth Corporation logo is photographed at their facility in Smiths Falls, Ontario, Canada on January 4, 2018. REUTERS / Chris Wattie / Photo File
The agreement is expected to yield a premium of around 28% at Acreage's five-day average trading price of around 25% of its closing price on Wednesday, the source said.
The operation could be announced as early as next Wednesday, the source said, but warned that there was no certainty that both parties would agree to any agreement.
The person asked not to be identified because the case is still confidential.
In Canada, cannabis companies pay money to fight competition and develop new products, especially after the country approved the use of marijuana for recreational purposes in October. They also looked for ways to enter the US market, where cannabis remains illegal at the federal level.
Acreage became public with the Canadian Securities Exchange in November and has licenses or agreements with holders located in 19 US states, while managing a chain of retail stores.
An agreement would immediately give Canopy the rights to Acreage's products and set up the two companies with a stock swap agreement as long as marijuana becomes legal in the US, the source added.
On the basis of the purchase agreement, Canopy could lend Acreage some of their brand and intellectual property rights to enter the US market while helping Growth grow, the source said.
Neither Acreage Holdings nor Canopy Growth immediately responded to requests for comment.
US Canopy US stocks rose nearly 8% to $ 46.22 in prolonged trading.
Reportage of Harry Brumpton in New York and Aishwarya Venugopal in Bengaluru; edited by G Crosse