Replies to post #89299 on Canopy Growth Corp (WEED)

[Wo]

Ive had that valuation in mind since the deal was announced and it kept rolling over in my head that STZ is giving an implied value of ~20b, yet Canopy has yet to trade at that valuation. Others have. And so little is mentioned of the additional 4.5B in warrants. I think its best to read Canopy M&A from at least 4 quarters ago to anticipate what the company is closing in on today, and rate the execution on that. Then read the most recent ones and again, anticipate what the value of the company will be upon those executions. For example, in just 4 short years, the corporation and industry are here. What might both look like in another, say 2-4 years? Perhaps Unrecognizable in terms of development. Who travels in any direction and only looks back?

https://www.canopygrowth.com/wp-content/uploads/2018/08/CBI-CG-Press-Release-FINAL.pdf

Constellation Brands to Invest $5 Billion CAD ($4 Billion USD) in Canopy Growth to Establish Transformative Global Position and Alignment

Constellation Brands will increase its ownership interest in Canopy Growth by acquiring 104.5 million shares directly from Canopy Growth, thereby achieving approximately 38 percent ownership when assuming exercise of the existing Constellation warrants. Constellation Brands is acquiring the new shares at a price of C$48.60 per share, which is a 37.9 percent premium to Canopy’s 5-day volume weighted average price of the common shares on the Toronto Stock Exchange (“VWAP”), and a 51.2 percent premium to the closing price on August 14, 2018. Constellation will also receive additional warrants of Canopy that, if exercised, would provide for at least an additional $4.5 billion CAD to Canopy Growth.

[MMPRuser]

well you need to contemplate the share structure before and after the deal.

it is all about the warrants....at this price CGC has a fully diluted market capitalization of over $30 billion, STZ would be paying $10 billion for about 50% of it.....over the next three years of course, they don't need to pay all of that up front...

i mean if you really think this stock is going up from here, that it will be far more valuable than $65 a share in 2022, well STZ is going to reap most of the rewards off that for sure....and if it goes the other way it certainly doesn't hurt STZ as much as it hurts an investor buying WEED today...

STZ is a great way to be invested in WEED right now, but a hedge against all but the best case scenario for WEED

it is all about the warrants.....this is just rough estimates - but I figure every STZ share has access to over $85 usd dollars of WEED stock (1.7 shares) and it's cost in total would be less than $60 USD per STZ share to obtain them, the majority of which they don't need to actually pay out until 2021.

This is just how I am choosing to look at the situation, I like STZ far better than WEED right now, I predict that STZ will outperform WEED over the next 3-4 years