Fortune 500 Constellation Brands Takes $191 Million Stake in Cannabis Industry

The Wall Street Journal broke big news for the global alcohol and cannabis industries today, detailing an investment by Constellation Brands (NYSE: STZ) into Canadian licensed cannabis producer Canopy Growth (TSX: WEED) (OTC: TWMJF). Constellation will acquire 9.9% of Canopy Growth for C$245mm, which at the current exchange rate is equal to about US$191mm. It also has an option to increase the stake to 20%.

The exact terms of what is the first major cross-industry investment will be disclosed in a press release before the market opens tomorrow, but Canopy Growth CEO Bruce Linton stated that it was at a premium to the close of C$12.79 on Friday. Canopy Growth had 165.3mm shares outstanding and fully diluted shares of 176.54mm including 11.24mm options as of June 30th and will report its FY18-Q2 results by November 14th.

Constellation Brands, which has a market capitalization of approximately $41 billion, has a portfolio of wine, beer and spirits brands that include Corona, Clos du Bois, Charles Smith Wines, Robert Mondavi, Casa Noble Tequila and Svedka Imported Vodka. According the WSJ, it purchased the stake to pursue development of drinkable cannabis beverages and to get a head start in advance of eventual legalization in the United States.

Canopy Growth, the first Canadian LP to trade publicly, recently posted an all-time closing high of C$13.78 on October 11th and closed Friday at C$12.79:

Read Jennifer Maloney’s and David George-Cosh’s “Big Brewer Makes a Play for Marijuana Beverages”:

Published by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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