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Canadian Pottery Company Cover growth (CGC) engulfs the US hemp research company Ebbu in the latest example of a merger between marijuana stocks, which are forming new bases after a period of volatility.
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Canopy Growth has agreed to pay $ 19.2 million in cash and issue 6.22 million common shares to Ebbu in exchange for the assets acquired. The transaction is still subject to regulatory approval.
In addition, an additional purchase price of $ 76.8 million will be payable if certain scientific milestones have been achieved within two years of the closing of the transaction.
Before the legalization of cannabis for recreational purposes in Canada on Wednesday, there has been a wave of mergers and acquisitions in the marijuana industry, with big players eager to find attractive rivals.
Last week, MedMen Enterprises decided to buy the medical cannabis supplier PharmaCann under a $ 682 million contract that would create the largest US weed company. And in Canada, TSX listed Aurora Cannabis has moved a lot. Until now, he has announced 15 acquisitions over the past two years.
Boost Boost for canopy growth
According to Canopy Growth, Ebbu has advancements in intellectual property and R & D that directly apply to its genetic breeding program for cannabis rich in THC and hemp, as well as its potentially lucrative capacity for infused beverages. cannabis.
Ebbu's intellectual property portfolio is also expected to contribute to the Canopy Health Innovations formulation program.
Management believes that it can potentially significantly reduce the cost of CBD production by applying Ebbu's intellectual property. Canopy Growth operates a full-size hemp operation in the Canadian province of Saskatchewan.
"We collectively believe that consumer confidence is achieved by leading the scientific program needed to achieve predictable and repeatable results and overlaying the power of the brand," said Mark Zekulin, co-CEO of Canopy Growth.
Canopy Growth has stated that the agreement would be in accordance with current US federal law. A new subsidiary will use Ebbu assets and staff to conduct its research and development work. In addition, there will be no production or sale of R & D products in the United States until federal law permits.
Marijuana Stocks Eye New Bases
Canopy Growth shares jumped 8% to 53.79 on the stock market today on a large volume early, and its relative strength is strong. Of the other marijuana stocks, Tilray (TLRY) increased by 5.6% to 156.55, while Cronos Group (CRON) rebounded 6.5% to 10.50.
Marijuana stocks have fallen since they've made huge gains and now seem to be consolidating. With recreational cannabis scheduled to be legalized in Canada on Wednesday, it could be a key week for the sector.
Canopy Growth seems to be the most promising solution from a technical point of view and only has one week to form a base. If the stock, whose Canadian symbol is WEED, continues to trade well, it could be purchased with a correct entry of 55.79.
The stock could be better placed for entry into the potentially lucrative beverage space infused with cannabis. Last year, Corona parent Constellation Brands (STZ) took a close to 10% stake in Canopy and increased its stake earlier this year with a $ 4 billion investment.
Tilray has fallen dramatically from its record of 300, but trade has been tight over the past three weeks. If this continues, it may soon offer a potential entry. At the same time, the Cronos group experienced a dramatic spike, even though it found support in its 50-day line over each of the last two weeks.
ETFMG Alternative Harvest (MJ), a marijuana-traded exchange-traded fund, advanced 4.9%. ETF AdvisorShares Vice (ACT), which is also exposed to cannabis, edged up 0.4%.
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