As a sign of just how un-enticing the European cannabis market is, Canopy Growth Corp (TSX: WEED) this morning announced it would be divesting its C3 Cannabinoid Compound Company GmbH asset, which is headquartered In Germany, where recent positive legislation action is believed to lead to the legalization of cannabis. The company, naturally, took a major loss on the investment.
Originally acquired in May 2019 via an all-cash acquisition, the company paid a total of C$342.9 million for the company which was at the time claimed to be a “transformative deal.” Two years later, the firm is disposing of the asset for C$115.5 million. The sale allegedly saves the company $50 million in short term capital requirements that were needed to separate C3 from the operations of its former owner Bionorica SE.
An earn-out payment of up to C$61.4 million is also in play, subject to undisclosed milestones being achieved.
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The asset is being sold to Dermapharm Holding SE, whom is a pharmaceutical firm that like C3, is headquartered in Germany. The subsidiary is being sold off as Canopy looks to focus on a consumer packaged good model and recenters its focus to core markets.
Despite the divesture of Germany medical cannabis assets, the company has indicated it will look to continue to export Canadian cannabis to international markets, which include Germany.
The asset divesture is currently slated to close by the end of January 2022.
Canopy Growth Corp last traded at $11.75 on the TSX.
Information for this briefing was found via Edgar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
