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Canopy acquires Hiku Brands

Ontario-based Canopy Growth has entered into a deal to acquire Hiku Brands, a craft cannabis producer in BC with a national retail presence.

As part of the terms of the arrangement, Hiku shareholders will receive 0.046 of a Canopy share in return for each common share of Hiku, which is the equivalent of $1.91. The agreement will need the approval of Hiku’s shareholders.

Hiku, a retail-focused producer, was formed when DOJA Cannabis and Tokyo Smoke, two cannabis firms based in BC, agreed to merge. It positioned the newly minted firm as one of the first producers of craft cannabis in Canada, with a portfolio of brands and a national retail presence.

Alan Gertner, CEO of Hiku, says, “This transaction represents an incredible step in the Hiku journey that both realizes immediate benefits for our shareholders and at the same time provides an unparalleled opportunity to join forces with a preeminent global cannabis player. Ultimately, together we will continue to build one of the world’s most engaging and successful cannabis retail and brand businesses. Canopy is a truly special cannabis company that is well positioned to lead both in Canada and around the world.”

Canopy Growth highlighted some other elements of the transaction, including:

·       Hiku shareholders will receive a premium of 33% based on the 20-day volume weighted average process of Canopy and Hiku shares as of July 9, and 21% based on the closing prices of Canopy shares on the TSX and Hiku shares on the CSE on July 9.

·       The opportunity for Canopy and Hiku to integrate and expand with respect to retail stores in provinces where direct consumer sales of cannabis will be permitted.

·       Approximately $600 million of capital will be available to support expansion.

A special meeting of Hiku shareholders is expected to take place this August to agree upon the proposal, and a two-thirds majority will be needed to approve the transaction. No approval of Canopy shareholders is required to seal the deal.

Bruce Linton, Chairman and CEO of Canopy Growth, composed a haiku about the deal, which says,

“Hiku equals brands.

Canopy is built on brands.

So we combined them.”

 

Photos courtesy of Canopy Growth and Hiku Brands.

Tags: Alan Gertner (1), Bruce Linton (1), Canopy Growth (24), craft cannabis producer (1), Hiku Brands (1)