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Canopy Growth Corp. Agree Deal With Couche-Tard

Added: (Wed Feb 27 2019)

Pressbox (Press Release) - To the casual observer, Canopy Growth Corp.’s agreement with convenience-store operator Alimentation Couche-Tard Inc. to open a store in London, Ontario doesn’t look like one of the industries bigger deals.
However the agreement could prove to be one of the most significant deals for Canopy since they received a $4 billion investment from Constellation Brands.If Canopy can leverage Couche-Tard’s global footprint and network of 16,000+ stores in North America, Europe, Asia, Latin America and the Middle East.
Canopy’CEO: Bruce Linton was unusuallyreticent about the Couche-Tard deal, declining to comment on whether the store opening will be a start of bigger partnership. “Canada is an excellent place to figure things out, but it’s not the primary place from which a company can be operating and be a globally relevant player,” he was quoted as saying last week.
Couche-Tard publically stated a month before Canada legalized recreational cannabis, that it was interested in getting involved in the cannabis industry and it seems this deal, will be their first foray in the market.

Not to be left out, Tilray Inc. also hopes to acquirehemp-food manufacturer Manitoba Harvest for up to $319 million USD. Similar to Couche-Tard, Manitoba Harvest brings a large distribution network to the deal with more than 13,000 points of sale across the U.S., including Walmart, Costco, Whole Foods and Amazon amongst others, potentially opening the door for mainstream sales of CBD products down the road.

Cannabis REIT?
Canopy have long been a trail blazer in the cannabis industry, with their IPO enabling them to become the first company in the industry to hit C$1 billion in market value. They may have their sights on another first, as they mull over the intricacies of setting up the first cannabis bond or the first spin-off of a cannabis REIT.
CEO’ Linton said Canopy want to leverage their tangible assets, which are valued at a “couple billion dollars,” and as a result, they are considering issuing bonds in addition to mortgaging their properties or converselysetting up a real estate investment trust.
Cannabis companies have only just recently started tapping into the debt markets, and as yet, none of them have issued a straight bond. That being said, Canopy Growth Corp. raised C$600 million in a convertible bond sale last June.

Gary Underwood, Research Analyst: Middleton Associates

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