Canopy Growth Corp doesn’t use the word ‘growth’ lightly. Let’s get one thing straight, regardless of what you think of Canopy, ie ‘overvalued, inflated, overhyped’. Canopy is going to be around in 20 years. That is more than you can say about a lot of companies in this space, and that is a very important fact for value investors who are looking to get in this for the long haul. Australia is a very interesting domino to watch fall in the world of cannabis momentum, Canopy will have their footprint on this opportunity.
ASX-listed medical marijuana company AusCann is actively seeking to raise $30 million for clinical studies and expansion. Funds raised are designed for clinical studies for product registration in Australia, expansion of AusCann’s Australian manufacturing plant for final dose form manufacturing and establishment of a manufacturing facility in Chile.
AusCann shares went into a trading halt on Tuesday morning as its broker Canaccord Genuity finalised the deal. The placement was buyer led, coming after AusCann received interest from North American investors. This included Canadian cannabis giant Canopy Growth Corp. With 24 million people living in Australia, this would be a smart move in Canopy’s global cannabis domination strategy. This is not a huge surprise as Canopy Growth Corp is already AusCann’s biggest investor with a 10.65% stake.
The offer was priced at $1.10 a share. AusCann shares last traded at $1.28, valuing the company at $355 million on a market capitalisation basis. The placement would be followed by a share purchase plan to raise up to another $8 million.