Shares of Canopy Growth Corp CGC, a Canada-based cannabis company, surged Wednesday morning after announcing an expansion of a partnership with minority shareholder Constellation Brands, Inc. STZ.
Constellation Brands said it will invest C$5 billion ($4 billion) in Canopy, which would increase its ownership stake to 38 percent. As part of the agreement, Constellation will acquire new shares directly from Canopy at a 37.9-percent premium to Canopy's five-day volume weighted average price on the Toronto Stock Exchange.
Canopy will use the proceeds from the transaction to strategically build and/or acquire key assets to establish a global scale.
The Sector Reacts
The transaction is the largest of its kind to date in the cannabis space and the nearly 40-percent premium paid by Constellation likely supported upside in other cannabis-related names Wednesday morning.
- Canopy Growth was up nearly 40 percent.
- Cronos Group Inc CRON, a company dedicated towards changing and removing negative misconceptions about cannabis, was trading higher by 12 percent.
- Tilray Inc TLRY, a company in engaged in research, cultivation, production and distribution of cannabis, was trading higher by 11 percent.
- ETFMG Alternative Harvest ETF MJ, an index that tracks the performance of companies engaged in legal activities of cannabis for medical or non-medical purposes, was trading higher by 6 percent.
- GW Pharmaceuticals GWPH, a developer of cannabinoid prescription medicines, was trading higher by 1.2 percent. GWPH shares got a boost from Stifel, which initiated coverage on the stock with a Buy rating.
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Related Links:
The Cannabis Industry's Go-Public Frenzy: A Chat With Companies That IPOed This Year
AxisWire: Cannabis Companies Are Moving To Canada, Its Friendlier Legal Climate
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