VICTOR, N.Y., April 18, 2019 (GLOBE NEWSWIRE) -- Constellation Brands, Inc. (NYSE: STZ and STZ.B), a leading beverage alcohol company, today announced that it plans to enter into an agreement with Canopy Growth Corporation (Canopy) (TSX: WEED, NYSE: CGC), a leading diversified cannabis company, to modify certain warrants and other rights. These changes are the result of Canopys intentions to acquire Acreage Holdings, Inc. (Acreage) upon U.S. Federal cannabis legalization.
Earlier today, Canopy announced (see Canopy press release Canopy Growth Announces Option to Acquire Leading U.S. Multi-state Cannabis Operator, Acreage Holdings) it has entered into an agreement with Acreage, a U.S. multi-state cannabis operator, where Canopy plans to acquire the shares of Acreage upon U.S. Federal cannabis legalization (the Triggering Event), subject to certain conditions. This transaction, as well as proposed modifications to certain Constellation warrants, are subject to approval by Canopy shareholders. Constellation has agreed to waive its veto rights to this transaction subject to certain proposed modifications to the warrants and other conditions as outlined below:
In addition to the 18.9 million warrants associated with the November 2017 Canopy investment, Constellation also currently has 139.7 million warrants in Canopy, which upon shareholder approval would become exercisable over a period of five to eight years from November 1, 2018, compared to the previous three-year period. This includes 88.5 million Tranche A warrants, which are exercisable at a price per share of C$50.40 and 51.2 million Tranche B warrants, of which 38.4 million, or 75 percent, are exercisable at a price per share of C$76.68. The remaining 25 percent of the original Tranche B warrants will become Tranche C warrants and will be exercisable at Canopys five-day volume weighted average price of the common shares on the Toronto Stock Exchange (VWAP) immediately prior to exercise. If Canopy exercises its right to acquire the shares of Acreage and Constellation were to exercise all of their outstanding Canopy warrants, Constellations ownership in Canopy is not expected to exceed 50 percent. | |||||||||||||
Current Warrants | Revised Warrants | ||||||||||||
Expiry Date | Shares | Price | Expiry Date | Shares | Price | ||||||||
Tranche A warrants | Nov. 1, 2021 | 88.5 M | C$50.40 | Nov. 1, 2023 | 88.5 M | C$50.40 | |||||||
Tranche B warrants | Nov. 1, 2021 | 51.2 M | VWAP (1) | Nov. 1, 2026 | 38.4 M | C$76.68 (2) | |||||||
Tranche C warrants | -- | -- | -- | Nov. 1, 2026 | 12.8 M | VWAP (1) | |||||||
(1) | Five-day VWAP of Canopy common shares on the Toronto Stock Exchange immediately prior to exercise | ||||||||||||
(2) | 75 percent of original Tranche B warrants priced at Canopy stock 52-week high | ||||||||||||
If Constellation exercises Tranche A warrants in full, Canopy has committed to repurchase the lesser of 25 percent of its issued shares to Acreage or a dollar amount equal to 25 percent of the implied enterprise value of Acreage within 24 months of the date of Constellations warrant exercise. | |||||||||||||
Constellation would be permitted to purchase up to 20 million Canopy shares in the open market prior to the warrants being exercised or terminated, provided that for each share purchased by Constellation, the number of Tranche B warrants is decreased by one. | |||||||||||||
Constellation will continue to maintain its current level of representation on Canopys Board of Directors. |
MEDIA CONTACTS | INVESTOR RELATIONS CONTACTS | ||||
Mike McGrew | 773-251-4934 | michael.mcgrew@cbrands.com | Patty Yahn-Urlaub | 585-678-7483 | patty.yahn-urlaub@cbrands.com |
Amy Martin | 585-678-7141 | amy.martin@cbrands.com | Bob Czudak | 585-678-7170 | bob.czudak@cbrands.com |
Tom Conaway | 585-678-7503 | thomas.conaway@cbrands.com | |||
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