Constellation Brands Exercises Canopy Growth Warrants
Corona beer maker Constellation Brands Inc's subsidiary has exercised warrants to buy shares of Canopy Growth Corp, increasing its stake to 38.6% in the Canadian marijuana producer.
US-listed shares of Canopy were up nearly 13% in extended trading.
The warrants, which were originally issued on 2 November 2017, were exercised at C$12.9783 per common share for a total of about C$245 million ($174 million), the companies said.
The common shares represented about 5.1% of the issued and outstanding common shares of Canopy.
Constellation now indirectly holds a total of 142.25 million common shares of Canopy, 139.75 million warrants to purchase common shares and C$200 million principal amount of senior notes.
"While global legalisation of cannabis is still in its infancy, we continue to believe the long-term opportunity in this evolving market is substantial," Constellation Chief Executive Officer Bill Newlands said.
Constellation had said earlier in the year that it does not plan to make any additional cash contributions to Canopy beyond the exercise of the warrants.
The company was one of the first major alcohol producers to enter the growing cannabis industry when it took the stake in Canopy in 2017.
It has since had to record charges in various quarters due to the decrease in the fair value of its over $4 billion investment as Canadian weed producers struggle to turn a profit due to lower-than-expected demand, while expansions hit sales and lift costs.