Debra Borchardt
Today’s transaction closings really sum up the current cannabis industry. One company is shedding assets to generate cash to pay debts, while another is buying assets to build its portfolio.
Canopy Growth Corp. (NASDAQ: CGC) told investors it closed the deal to sell its Hershey facility, while Tilray Brands Inc. (NASDAQ: TLRY) closed a deal to buy beverage businesses.
Canopy Growth
Canopy completed the sale of its Hershey Drive facility in Smiths Falls, Ontario, for cash consideration of approximately C$53 million. Canopy had announced the plan to close the facility in February and by August had found a buyer – Hershey Canada Inc.
“The closing of the Hershey Drive facility sale further demonstrates our focus and resolve to complete our transformation to a simplified, asset-light operating model while continuing to improve our liquidity position and enhance our balance sheet,” David Klein, chief executive officer of Canopy Growth, said. “Our ability to be nimble and brand-focused has ensured that Canopy Growth is well positioned to succeed in the North American cannabis market.”
The company had mushroomed as it built massive cultivation operations and loaded up on debt, only to decide to dump all the growing facilities it spent millions creating.
Canopy decided to exit cannabis flower cultivation at the facility, cease the sourcing of cannabis flower from its Mirabel, Quebec, facility, and move to a third-party sourcing model for cannabis beverages, edibles, vapes, and extracts.
Tilray
Tilray has been on a beer binge, buying up several labels from Anheuser-Busch (NYSE: BUD), including the breweries and brewpubs associated with them. The acquired businesses include
- Shock Top
- Breckenridge Brewery
- Blue Point Brewing Co.
- 10 Barrel Brewing Co.
- Redhook Brewery
- Widmer Brothers Brewing
- Square Mile Cider Co.
- HiBall Energy.
Tilray, which has primarily been a cannabis company, said that it was expanding into the beer business due to the delay in the federal legalization of cannabis in the U.S.
“Tilray Brands’ portfolio today reflects our diversified business and the integration of key strategic acquisitions that have enabled us to grow our top line and deliver substantial cost savings through synergies, all while significantly expanding distribution to coveted markets across the U.S. and internationally,” CEO Irwin D. Simon said.
“With this EBITDA accretive transaction, Tilray has acquired a stellar lineup of eight craft beer and beverage brands that both solidify our leadership in the craft beer industry and strengthen our business in the expansive beverage sector in which we see tremendous opportunity to reinvigorate innovation across many categories including nonalcoholic beverages, energy, and nutritional drinks.”
Tilray said it is expected to become the fifth largest craft beer business in the U.S. market this year, up from the ninth, with its current brands SweetWater Brewing Co., Montauk Brewing Co., Alpine Beer Co., and Green Flash Brewing Co.. The beer business is projected to generate craft beer pro-forma revenue of $250 million.
In addition to Tilray Brands’ craft beer portfolio, Tilray also owns Breckenridge Distillery, the award-winning spirits brand, and the World’s Best Blended Whisky, Truss Beverage Co. nonalcoholic cannabis-beverages, and Happy Flower CBD sparkling nonalcoholic cocktails.
