Cronos Group Inc (CRON)

[venswam]

"But there's more than meets the eye about this deal. It's an extremely unique acquisition in the cannabis industry for one reason: It's highly cash-centric.

Under the terms of the deal, Cronos is paying $300 million (U.S. dollars) for Redwood, net of the company's cash and debt. However $225 million of this (again, subject to the aforementioned adjustments) will be doled out in cash, with "just" $75 million being financed by issuing new shares of Cronos Group stock. This is the first time a major purchase in the pot industry has been financed predominantly with cash.

Mind you, Cronos Group was sitting on $1.8 billion in cash and cash equivalents at the end of the first quarter, nearly all of which was derived from a $1.8 billion equity investment from tobacco giant Altria that closed in March. Cronos certainly had the cash to make this deal happen. Nevertheless, it's been common practice for cannabis stocks to hang onto their cash with a death grip, given the uncertainties of traditional financing options and early stage hiccups throughout the industry in Canada and select U.S. states. Rather, pretty much every deal being undertaken right now involves share issuances galore and ongoing share-based dilution."


https://www.fool.com/pwa/investing/2019/08/06/heres-why-cronos-groups-cbd-acquisition-is-so-uniq.aspx#click=https://t.co/NoIJPMfCDG