Pot Giant To Sell Its Facility Back To Hershey Canada For CA$53M, All Part Of Its 'Asset-Light' Strategy

Canadian marijuana giant Canopy Growth Corporation WEEDCGC entered into an agreement to sell its Hershey Drive facility in Smiths Falls, Ontario, as part of the company's transformation to a simplified, asset-light operating model. Canopy Growth will retain its Smiths Falls-based post-harvest manufacturing facility.

The news comes on the heels of the company’s second-quarter earnings report revealing quarterly sales of CA$109 million ($81.2 million), which beat the analyst consensus estimate of CA$67.98 million, and grew 26.32% year-over-year. Additionally, Canopy reduced its debt by over $1 billion, and the company’s CEO David Klein, who will join a slew of other top cannabis executives, experts, and entrepreneurs at the upcoming Benzinga Cannabis Capital Conference in September as a featured speaker, talked about “asset-light model” strategy.

Under the agreement, the facility will be sold to Hershey Canada, Inc. for cash consideration of approximately CA$53 million. The completion of the transaction is subject to customary closing conditions.

"We are pleased to have reached an agreement with Hershey on this important sale. This is the latest milestone in our focused effort to reduce costs and further enhance our balance sheet," Klein stated. "Each of the steps we have taken as part of our transformation to a simplified, asset-light operating model supports our ability to deliver in-demand products from brands our customers love, with greater agility and less execution risk. Once again, we have demonstrated Canopy Growth's ability to achieve significant organizational and operational change to position the Company for future growth in the Canadian market."

Jason Reiman, chief supply chain officer at The Hershey Company, commented “Our intent to purchase the Hershey Drive property in Smiths Falls is another example of the strategic investments we're making in our supply chain network and our Canadian operations to support growth.”

Upon the completion of the transaction, Canopy Growth will have sold a total of seven properties for an aggregate gross amount of approximately CA$155 million since April 1, 2023. Net proceeds received from the sale of the facility will be used primarily to pay down the company's senior secured credit facility.

Price Action

Canopy Growth shares were trading 0.313% higher at $0.3851 per share at the time of publishing Thursday morning.

The Benzinga Cannabis Capital Conference, the place where deals get done, is returning to Chicago this Sept 27-28 for its 17th edition. Get your tickets today before prices increase and secure a spot at the epicenter of cannabis investment and branding.

Photo: Benzinga edit with images by geralt, lindsayfox via Pixabay