Canopy Rivers Sells Portfolio Assets To Canopy Growth For $297M

Canopy Growth Corp CGC reported Monday it's giving up on its interest in Canopy Rivers Inc. RIV CNPOF.

The Toronto-based cannabis-focused venture capital firm opted to transfer three of its portfolio assets to Canopy Growth.

Rivers will obtain $115 million in cash and 3.75 million of Canopy Growth's common shares in exchange. In addition, the Canadian cannabis giant agreed to cancel all 36,468,318 Multiple Voting Shares and the 15,223,938 Subordinate Voting Shares of Rivers it held.

Transaction Details

Under the arranged agreement, Canopy Growth will increase its fully-diluted conditional ownership in TerrAscend Corp. TRSSF to 21% by acquiring roughly 12.5 million of its exchangeable shares; around 2,23 million of its common shares purchase warrants at $5.95 per share; 333,723 of its common share purchase warrants at $6.49 per share; and a $13.2 million loan receivable that TerrAscend Canada Inc. owns to Rivers' wholly-owned subsidiary Canopy Rivers Corporation.

Canopy Growth also agreed to acquire all of Les Serres Vert Cannabis Inc.'s common shares of Class A preferred shares that CRC held, to increase its stake in Vert Mirabel to approximately 67%.

Lastly, Rivers opted to cancel the royalty agreement between CRC and The Tweed Tree Lot Inc., which will provide Canopy Growth with around $2.9 million in annual cash savings per year over the balance of the two-year term of the deal.

JW Asset Management has backed the transaction. It will have the largest stake in Rivers once the transaction is finalized.

Rivers' Next Phase Of Growth

Rivers disclosed that the transaction would "propel the Company to its next phase of growth" by pursuing new opportunities, including "potentially in the U.S.”

Narbe Alexandrian, the company's President, and CEO told Benzinga that some of the "areas that continue to interest us the most are the ones we've been eyeing for some time now," including plant sciences and technology companies as well as companies that produce biosynthetic cannabinoids, particularly minor cannabinoids.

Rivers is also interested in pursuing "brands that are carving out a niche demographic in the space and building loyal customer followings," Alexandrian added.