SMITHS FALLS, ON and NEW YORK, June 27, 2019 /CNW/ – Acreage Holdings, Inc. (“Acreage“) (CSE: ACRG.U) (OTC: ACRGF) (FSE: 0ZV) and Canopy Growth Corporation (“Canopy Growth“) (TSX: WEED) (NYSE: CGC) (together, the “Companies“) are pleased to announce the implementation of Acreage’s previously announced arrangement under section 288 of the Business Corporations Act (British Columbia) with Canopy Growth (the “Arrangement“).
Pursuant to the Arrangement, the Acreage articles have been amended to provide Canopy Growth with the option (the “Canopy Growth Call Option“) to acquire all of the issued and outstanding shares in the capital of Acreage (each, an “Acreage Share“), with a requirement to do so, upon a change in federal laws in the United States to permit the general cultivation, distribution and possession of marijuana (as defined in the relevant legislation) or to remove the regulation of such activities from the federal laws of the United States (the “Triggering Event“), subject to the satisfaction of the conditions set out in the arrangement agreement entered into between Acreage and Canopy Growth on April 18, 2019, as amended on May 15, 2019 (the “Arrangement Agreement“). Canopy Growth is permitted to waive the Triggering Event.
Holders of Acreage Shares and certain securities convertible or exchangeable into Class A subordinate voting shares of Acreage (the “Subordinate Voting Shares“) as of the close of business on June 26, 2019, are entitled to receive approximately $2.63, being their pro rata portion (on an as converted to Subordinate Voting Share basis) of US$300,000,000 (the “Option Premium“) paid by Canopy Growth to such persons as consideration for granting the Canopy Growth Call Option. It is expected that the Option Premium will be distributed to such holders of record on or before July 3, 2019.
“On behalf of Canopy Growth, I thank the shareholders of both companies for their vote of confidence in this historic transaction. We have experienced a tremendous year of growth and this deal has activated the accelerator in terms of where we will take both companies in the coming years,” said Canopy Growth Chairman and co-CEO Bruce Linton. “In leading an industry that is full of firsts, this agreement is moving both Acreage and Canopy Growth into unprecedented territory of strength. Giving their team access to all of the key learnings we’ve gleaned over the last few years, will in turn create a truly turnkey entry point into the US market and deepen the value returned to our shareholders once we are federally permitted to close.”
Acreage will continue to operate as a stand-alone entity and to conduct its business independently, subject to compliance with certain covenants contained in the Arrangement Agreement and the Subordinate Voting Shares will remain listed on the CSE, the OTCQX and the Frankfurt Stock Exchange.
Upon the occurrence or waiver of the Triggering Event, Canopy Growth will exercise the Canopy Growth Call Option and, subject to the satisfaction or waiver of certain conditions to closing set out in the Arrangement Agreement, acquire (the “Acquisition“) each of the Subordinate Voting Shares (following the automatic conversion of the Class B proportionate voting shares and Class C multiple voting shares of Acreage into Subordinate Voting Shares) in exchange for the payment of 0.5818 of a common share of Canopy Growth per Subordinate Voting Share (subject to adjustment in accordance with the terms of the Arrangement Agreement). If the Acquisition is completed, Canopy Growth will acquire all of the Acreage Shares, Acreage will become a wholly-owned subsidiary of Canopy Growth and Canopy Growth will continue the operations of Canopy Growth and Acreage on a combined basis.
The Companies believe that the Arrangement will deliver significant benefits that will help accelerate the growth of Acreage across the United States powered by the expertise of the world’s leading cannabis company. In turn, upon the Acquisition, Canopy Growth shareholders will benefit from a national turnkey platform in the United States.
For more information about the Arrangement and the Acquisition please see the respective information circulars of each of Canopy Growth and Acreage dated May 17, 2019, which are available on Canopy Growth’s and Acreage’s respective profiles on SEDAR at www.sedar.com.
The Companies intend to update their shareholders by press release of the following key milestones: (i) the occurrence or waiver of the Triggering Event; (ii) the proposed Acquisition effective date; (iii) material developments relating to the Acquisition; and (iv) material regulatory developments in the United States.