Part of cannabis and investing
Canadian marijuana stocks rallied on Wednesday morning after Constellation Brands announced that it had struck a deal to invest $5-billion in Canopy Growth Corp., boosting investor confidence that the nascent marijuana sector is attractive to blue-chip consumer brands.
Canopy shares surged 32 per cent in early trading, taking the stock to $42.37 in Toronto, up $10.26.
Constellation Brands Inc., the US$39-billion U.S.-based beer, wine and spirits producer, said that it would buy 104.5 million Canopy shares priced at $48.60 each, marking a significant premium over Tuesday’s closing price of $32.15.
The deal also includes 139.7 million warrants, which give Constellation the ability to increase its ownership stake in Canopy to more than 50 per cent if the warrants are exercised.
But the deal reverberated to many other marijuana producers. Aphria Inc. jumped 16 per cent in early trading. The shares traded at $10.12, up $1.40.
Aurora Cannabis Inc. rose 19.7 per cent, or $1.05, to $6.39.
The Horizons Marijuana Life Sciences Exchange Traded Fund, a basket of marijuana stocks that trades on the Toronto Stock Exchange but resembles a mutual fund, rose 9 per cent, to $15.90.
The moves follow mixed quarterly earnings releases that had been weighing on the marijuana sector. On Monday, Canopy reported a loss of 39 cents per share, after adjustments. That was lower than the loss of 16 cents per share than a consensus of analysts had been expecting. Revenue of $25.9-million was also shy of estimates.
David Berman