by Eric Vengroff, Financial Analyst
It’s easy to write a story a day about the various moves that Canopy Growth Corporation (TSX: WEED) (NYSE: CGC) executes regularly, but this one is certainly noteworthy. The company announced that it has finalized an all-cash transaction to acquire Storz & Bickel GmbH & Co. KG, related entities, and IP (collectively, “Storz & Bickel” or “S&B”) for a purchase price of up to approximately €145 million. S&B is an internationally recognized brand with a 22-year track record of leading innovations in vaporizer design and manufacturing, including its famous Volcano® brand.
The founders, Markus Storz and Jürgen Bickel, will remain as a part of the organization and will work alongside Canopy Growth’s management.
“Joining Canopy will enable S&B to take the next significant development step forward. Access to Canopy Growth’s extensive portfolio of test laboratories as well as pharmaceutical and medical-scientific know-how opens up entirely new product development opportunities,” said Jürgen Bickel, CEO, Storz & Bickel. “I am looking forward to actively shaping this development personally in a senior leadership position. On the one hand to ensure continuity and on the other hand to accelerate the development together with the Canopy team to lead it to unprecedented heights.”
“We view this as a marquee acquisition of the most recognized technology company in the industry,” said Bruce Linton, Chairman & Co-CEO, Canopy Growth. “This Company is well positioned for the next wave of federally-regulated products in Canada beyond dried flower and edible oils. By combining Canopy’s existing designs and Canada’s open environment for federally permissible R&D with Storz & Bickel’s deep IP portfolio and management team, Canopy Growth is poised to lead the high-margin vaporizing category around the world.”
Without being able to project the impact to the business as well as the principals, it certainly strikes the writer as an inspired move. S&B literally invented this space, and with others recently entering the space with new high-tech designs, it is apparent that cannabis is becoming increasingly tech-driven. There will be a continued push to improve the experience for cannabis consumption in this manner, as it largely mitigates the negative effects caused by the by-products caused by incineration of the product.
As is mentioned it’s own press release, Canopy Growth’s huge treasury reserves allow it to add strategic acquisitions without having to stop for more fuel, in the form of incremental equity raises, or miss an opportunity to dominate a space via strategic acquisition.
The information and opinions presented here are that of the author and do not represent the thoughts and opinions of this website. The analyst does not own or represent any of the companies listed in this article and receives no compensation from any party mentioned in this article. Readers are urged to do their own research and due diligence and should seek advice from an independent financial advisor before making any financial investment.