Local pot producer Canopy Growth (TSX:WEED)(NYSE:CGC) is expanding its brand portfolio and retail footprint with its latest deal, acquiring the parent company of Tokyo Smoke in a deal valued at $269 million.
The Smiths Falls-based firm announced Tuesday it will acquire Hiku Brands (CNSX:HIKU) in a share exchange. Shareholders will receive 0.046 Canopy stocks for every Hiku share they own.
All told, the all-stock acquisition is worth roughly $269 million. The deal represents a 33 per cent premium on Hiku’s shares based on a 20-day volume weighted average for both firms.
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Hiku Brands is the parent company of the Tokyo Smoke coffee shops, which also sell pot paraphernalia. Canopy notes in a press release that, where provincially permissible, it will leverage Hiku’s brick and mortar locations to retail cannabis products.
Hiku also owns numerous cannabis brands, including female-focused Van der Pop and Quebec-focused Maïtri, as well as a B.C.-based licensed producer.
“Hiku equals brands. Canopy is built on brands. So we combined them.”
“Hiku equals brands. Canopy is built on brands. So we combined them,” said Canopy CEO Bruce Linton in a statement fittingly phrased in the form of a haiku.
Hiku Brands had previously entered into a merger agreement with WeedMD, but determined Canopy’s offering was a “superior proposal.” As such, it will pay WeedMD a $10 million termination fee.
Canopy Growth has plenty of capital these days to make its acquisitions, having recently raised $500 million in convertible notes. Shares of the Ottawa-area pot firm were up 2.7 per cent in midday trading on the TSX.
