Canopy Rivers, a strategic investment subsidiary that is partially owned by Canadian marijuana producer Canopy Growth Corp., is selling some of its assets to the latter and is also cutting ties with the company.
The transaction is worth almost $232.2 million and according to Rivers will allow it to score new deals in the U.S.
According to an MJbizdaily.com article, the assets being transferred to Canopy Growth include:
Shares and share purchase warrants of Canadian and U.S. operator TerrAscend Corp., which will increase Canopy Growth’s stake in that company from 13% to 21%. TerrAscend has offices in Toronto and New York.
Shares of Quebec-based Les Serres Vert Cannabis, increasing Canopy Growth’s stake from 41% to 67%.
As part of the deal, Canopy Growth will also terminate royalty obligations owed to Canopy Rivers from Tweed NB and Canopy Growth will give Rivers CA$115 million in cash and 3.75 million Canopy Growth common shares.
Canopy Growth is also canceling its multiple voting shares and subordinate voting shares in Rivers “on a cashless basis.”
The entire deal is valued at approximately CA$297 million.
“Canopy Rivers was established in 2017 as a strategic investment vehicle for Canopy Growth, helping us pursue key business opportunities including development of the Vert Mirabel greenhouse which today is a very important component of our Canadian cannabis operations,” said David Klein, CEO, Canopy Growth.
“With our new strategy in place, it is appropriate for us to divest our interest in Canopy Rivers to increase our focus as a company.”
“On closing, the transaction will result in Rivers becoming a widely-held company and will unlock substantial value, providing Rivers with significant additional cash resources and allowing it to pursue opportunities in the global cannabis market, including the United States,” Canopy Rivers said in a news release.
“(Canopy Rivers) believes that its significant cash position and single class share structure will make it an attractive transaction partner for cannabis operators, including those in the U.S., looking for access to capital and a path to liquidity.”
Rivers will change its corporate name as part of the deal, which is expected to close in the first quarter of 2021.
“With our new strategy in place, it is appropriate for us to divest our interest in Canopy Rivers to increase our focus as a company,” Canopy Growth CEO David Klein said in a news release.