constellation brands buys canopy

constellation brands buys canopy插图

Constellation BrandsConstellation BrandsConstellation Brands, Inc., a Fortune 500 company, is an international producer and marketer of beer, wine and spirits. Constellation is the largest beer import company in the US, measured by sales, and has the third-largest market share of all major beer suppliers.en.wikipedia.orgfirst acquired a 9.9 percent stake inCanopy Growthin October 2017, as it sought to gain a foothold in the recreational marijuana market. The beer and wine giant later raised its stake in Canopy Growth to 38 percent in August 2018 after it announced an investment of C$5 billion, or $4 billion.

What is Constellation Brands’ stake in Canopy Growth?

Constellation Brands first acquired a 9.9 percent stake in Canopy Growth in October 2017, as it sought to gain a foothold in the recreational marijuana market. The beer and wine giant later raised its stake in Canopy Growth to 38 percent in August 2018 after it announced an investment of C$5 billion, or $4 billion.

Who bought out Canopy Growth Corporation?

Constellation Brands, the maker of Corona and Modelo, initially purchased a 9.9% equity stake in Canopy Growth in late October for about $190 million.

Is constellation’s partnership with Canopy Growth a green rush in cannabis?

The same strength can’t be said of its partnership with Canopy Growth ( CGC -6.57%), the Canadian cannabis company Constellation invested $4 billion into in 2017 in what became a green rush among giant corporations to stake claims in the budding pot market.

How many common shares does Constellation Brands own?

As a result of the acquisition of new common shares in Canopy Growth, Constellation Brands now indirectly holds a total of 142.25 million common shares, 139.75 million warrants to purchase common shares, and C$200 million principal amount of senior notes.

What is the stake in Canopy Growth?

Constellation Brands first acquired a 9.9 percent stake in Canopy Growth in October 2017, as it sought to gain a foothold in the recreational marijuana market. The beer and wine giant later raised its stake in Canopy Growth to 38 percent in August 2018 after it announced an investment of C$5 billion, or $4 billion.

How many common shares does Constellation have?

As a result of the acquisition of new common shares in Canopy Growth, Constellation Brands now indirectly holds a total of 142.25 million common shares, 139.75 million warrants to purchase common shares, and C$200 million principal amount of senior notes.

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Will Constellation buy Canopy Growth Corp.?

While most folks are probably focused on Canopy Growth’s coffers, which are soon to be boasting in excess of $4 billion in cash, or Constellation’s partnership with Canopy in developing alternative cannabis products and bolstering its distribution and marketing channels to overseas markets, the bigger question has to be asked: Will Constellation acquire Canopy?

How much is the Canopy Growth convertible note worth?

In June, Constellation Brands further solidified its positon by acquiring a third of the Canopy Growth’s 600 million Canadian dollar convertible note offering (worth about $450 million). Though these notes could be treated as general debt that earns interest and is redeemed at a later date, it also allowed Constellation the option to convert its notes into more common stock, thus increasing its ownership stake in Canopy.

When will Constellation Brands pay down debt?

Then, once complete, an 18- to 24-month clock begins to tick to allow Constellation Brands the time to pay down debt with its operating cash flow. This would suggest that it’s going to be a good 20 to 26 months before Constellation Brands’ management team would even remotely consider acquiring its unowned stake in Canopy Growth.

When will Constellation Brands return to its 3.5x leverage target?

Constellation Brands remains committed to its investment grade rating and therefore, has no plans to engage in mergers, acquisitions or share repurchase activity until the company returns to its 3.5x leverage target, which is expected to occur within 18-24 months of deal closing.

When did Canada legalize marijuana?

Whether you realize or not, you’ll bear witness to history in less than two months. On Oct. 17, 2018 , Canada is set to become the first industrialized country in the world to legalize recreational marijuana. Overall, it’ll be only the second country, other than Uruguay, to green-light adult-use pot.

Does Constellation have a wine and spirits segment?

Plus, Constellation’s most recent quarterly report showed a 3.1% decline in U.S. shipment volume in its wine and spirits segment. Meanwhile, net sales for its beer segment rose 11%, with shipment volume rising by a healthy 8.6%. With solid demand for beer products, Constellation probably views a partnership with Canopy Growth as a means to further bolster this strength while offsetting weakness in wine and spirit sales.

Beer, not pot, is the alcoholic beverage maker’s strength, but the cannabis stock keeps generating losses

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time.

Key Points

Constellation Brands’ beer sales continue to show strength, with Corona and Modelo depletions surging.

Beer hasn’t gone flat for Constellation

Constellation Brands said net sales of $2.32 billion were 4.9% lower than last year, but they still eked out a gain over analyst consensus estimates by $40 million.

Cannabis still causing headaches

The same strength can’t be said of its partnership with Canopy Growth ( NASDAQ:CGC), the Canadian cannabis company Constellation invested $4 billion into in 2017 in what became a green rush among giant corporations to stake claims in the budding pot market.

Cashing in on a growing trend

Speaking of partnerships, Constellation Brands also announced it was entering into one with Coca-Cola ( NYSE:KO) to produce ready-to-drink (RTD) beverages under the soda maker’s Fresca brand.

A stock ready to pop?

Still, the RTD space is very crowded, and Constellation is going to be spending between $5 billion and $5.5 billion on upgrading its brewery capacity in Mexico between now and fiscal 2026. That is going to constrain Constellation’s ability to expand earnings, even without the drag of marijuana on its operations.

Is Canopy Growth a public company?

Canopy Growth, Canada’s largest medical marijuana producer, took a hit after its first earnings report as a public company in the United States. Constellation will nominate four directors to Canopy’s seven-member board, although Constellation expects Canopy to continue to operate independently out of Canada.

Does Constellation sell cannabis?

Constellation is not planning to sell a drinkable cannabis product in the U.S. before legalization happens across the nation, but it may begin doing so in Canada next year. Constellation Brands is upping its bet on the cannabis industry, announcing an additional $4 billion stake in Canopy Growth on Wednesday.

Who owns Lagunitas Brewing?

California-based Lagunitas Brewing, which is owned by Heineken, announced June 26 the launch of a cannabis-infused sparkling water to be sold in select locations around California.