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Between the lines: The non-negotiated agreement is structured to avoid the obstacles associated with Canopy's unqualified acquisition of Canopy prior to its legalization. An agreement would result in the withdrawal of Canopy shares from the Toronto Stock Exchange and the New York Stock Exchange, both of which prohibited the listing of publicly traded companies in the United States because of its federal ban. (Canada legalized marijuana nationwide in October.)
- "It's like a very big Dutch duet, as in" if the rules change, we'll play, but in the meantime, we'll continue to spin the ropes. It's a game of waiting, "Brent Williams, founder of Highwater Financial, a cannabis-focused investment company, tells Axios.
- "This is an excellent precedent for Aurora Cannabis around the world to focus on the future expansion of Canadian companies in the United States."
How it works: The agreement is terminated if the cannabis is not legalized (or if the exchanges do not change their rules) in a period of 7.5 years or 90 months. If the transaction fails, no one knows what happened to the $ 300 million of initial cash that Canopy agreed to pay Acreage shareholders.
- But the leaders of both companies and many analysts are optimistic: legislation will be passed in the next 2 or 3 years.
- The companies said the value of the transaction represented a premium of 41% over the Acreage stock price.
What are the benefits for businesses:
- "Canopy is likely to miss the US market as it grows. Rob Wertheimer, founding partner of Melius Research, tells Axios: "Acreage is committed to what has become an emerging and well-positioned North American leader. For growth. "
The bottom line: This has just given companies the means to buy a booming marijuana market in the United States without breaking the law and facing the anger of stock markets. Analysts believe that the transaction structure could trigger a wave of similar transactions.
Go further: 4/20 is selling well: US companies are preparing for the big day of marijuana
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