Canopy Growth and Acreage: Timing the Acquisition

Canopy Growth Corporation (TSX: WEED) (NASDAQ: CGC) and Acreage Holdings, Inc. (CSE: ACRG.A.U, ACRG.B.U)(OTCQX: ACRHF, ACRDF) have provided an update on the closing timeline for Canopy USA, LLC's acquisition of Acreage. The deal, initially announced in 2019, is now expected to close on or around December 9, 2024, subject to satisfying or waiving closing conditions outlined in the Arrangement Agreements.

The acquisition timeline has been influenced by various factors, including market conditions, regulatory environments, and shareholder approval. Initially, Canopy Growth agreed to acquire all outstanding Class E subordinate voting shares of Acreage at a fixed exchange ratio of 0.3048 Canopy Shares per Fixed Share. In 2022, they amended the agreement to include a Class D acquisition, with a ratio of 0.4500 Canopy Shares per Floating Share, conditional on the Canopy Shares' Nasdaq price not exceeding US$5.00 before closing.



Fluctuations in Canopy Shares' price on the Nasdaq have direct implications for the acquisition's closing conditions. If the price does not surpass US$5.00 prior to closing, holders of Acreage's Fixed Shares will not receive any consideration for their shares. This condition underscores the sensitivity of the acquisition to Canopy Shares' price movements and the potential impact on Fixed Share holders.

The strategic importance of surpassing the US$5.00 threshold lies in its role as a key contingency in the acquisition agreement. If this threshold is not met, complexities may arise in the acquisition process, affecting both companies' share prices and market positions. A successful completion of the acquisition could boost Canopy Growth's market position in the U.S. cannabis market and potentially increase the value of both companies' shares.

The ongoing labor dispute at Canada Post has also affected the acquisition process, with registered Acreage shareholders potentially facing delays in receiving necessary documents. Despite these challenges, Canopy Growth and Acreage remain committed to the acquisition, highlighting the potential of the U.S. cannabis market.



In conclusion, the acquisition timeline for Canopy Growth's purchase of Acreage has been subject to various factors, including market conditions, regulatory environments, and shareholder approval. Fluctuations in Canopy Shares' price on the Nasdaq have direct implications for the acquisition's closing conditions and the value received by Fixed Share holders. The strategic importance of surpassing the US$5.00 threshold lies in its role as a key contingency in the acquisition agreement. The ongoing labor dispute at Canada Post has also affected the acquisition process, but both companies remain committed to the deal, underscoring the potential of the U.S. cannabis market.