Marijuana stock Canopy Growth (CGC) managed to smoke out the competition as it sealed a $205 million deal to acquire rival Hiku Brands.
It beat WeedMD in the battle to gain control of the firm Tuesday. Hiku cited Canopy Growth’s “superior proposal” as the reason for the merger.
Canopy Growth offered 0.046 of its shares, or $1.45 per share, for each Hiku share held. This was a premium of 30% to Hiku’s closing price on Monday. There were 140.95 million outstanding Hiku shares. The local currency price of the deal is 269.2 million Canadian dollars.
It is a key deal for Canopy Growth as Hiku’s Tokyo Smoke was given one of four master licenses for retail cannabis sales in the Canadian province of Manitoba.
“Hiku equals brands. Canopy is built on brands. So we combined them,” Canopy Growth CEO Bruce Linton said in a press release.
Canopy Growth, whose Canadian ticker is WEED, closed up 1.8% on the stock market today. Among other marijuana stocks, Cronos Group (CRON) dipped 0.1%, marijuana-focused exchange-traded fund ETFMG Alternative Harvest (MJ) lost 0.5%, and AdvisorShares Vice ETF (ACT), which also has exposure to cannabis, eased 0.7%.
Hiku CEO Alan Gertner said the deal gives immediate benefits to shareholders, while providing the opportunity merge with a top global cannabis player.
“Ultimately, together we will continue to build one of the world’s most engaging and successful cannabis retail and brand business,” Gertner said in a press release.
Last month, Canopy Growth announced a widening Q4 loss, though it came as investment soars. Following earnings, Cowen analyst Vivien Azer continued to rate the stock as outperform despite the losses, and in fact raised estimates.
Marijuana Stocks Merger Munchies
Canada’s cannabis industry has been rushing to consolidate amid recreational legalization this year.
The world’s top marijuana grower Aurora Cannabis agreed to gobble up Anandia Laboratories for around $88 million in an all-stock transaction last month.
Aurora Cannabis has been a big mover in the country’s fledgling marijuana industry. So far it has announced 14 other acquisitions in the past two years.
In May, it agreed to acquire rival marijuana producer MedReleaf in an all-stock deal worth $2.5 billion. This was the biggest cannabis deal yet and positioned Aurora as the world’s biggest pot producer.
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