October 17, 2018 was a big day for Canada, which officially allowed adult recreational cannabis use across all provinces beginning at midnight. There was a flurry of deal making in the week leading up to the event, mostly from MedMen Enterprises (OTCQB: MMNFF) here in the States, as it snapped up dispensaries and their licenses.
Up in Canada, Canopy Growth Corporation (NYSE: CGC) made its own acquisition. Canopy Growth, based in Smith Falls, Ontario, is a global cannabis and help company with a current market cap of nearly $10.7 billion. On a trailing 12-month basis, it generated revenue of $66.1 million and a net loss of $106.4 million, so you can see there are some investors who’ve been sampling the products.
Canopy’s target was ebbu, Inc., based in Evergreen, Colorado, which researches the chemical effects of cannabis products in human and cellular studies. It holds patents for different versions of recreational cannabis. The transaction will complement and accelerate multiple core verticals operating under Canopy Growth’s group of companies.
At closing, Canopy Growth will pay$65 million (CDN$25 million) in cash and issue 6,221,210 Company common shares to ebbu in exchange for the assets being acquired, for an approximate total of $357.4 million. Canopy has agree to pay an additional CDN$100 million if certain scientific related milestones are achieved within two years following closing. Canopy Growth will have the option of satisfying such milestone payments in cash, shares or a combination of cash and shares.
