Benzinga | Dec 15, 2021 08:06AM EST

Canopy Growth Reports Divestiture Of Pharmaceutical C3 Cannabinoid Compound Company For 80M In Upfront Payment, Added Earnout Of 42.6M

Sale supports the Company's strategic focus on driving demand for cannabis and cannabinoid-based consumer products

SMITHS FALLS, ON and NEUMARKT-IN-DER-OBERPFALZ, Germany, Dec. 15, 2021 /PRNewswire/ - Canopy Growth Corporation ("Canopy Growth" or the "Company") (TSX:WEED) (NASDAQ:CGC) has entered into an agreement to divest its subsidiary business, C³ Cannabinoid Compound Company GmbH ("C3"), to Dermapharm Holding SE ("Dermapharm") (WKN: A2GS5D, ISIN: DE000A2GS5D8), a European pharmaceutical company headquartered in Gr?nwald, Germany. The C³ business develops and manufactures pharmaceutical products and is comprised of Spectrum Therapeutics GmbH, based in Neumarkt-in-der-Oberpfalz, Germany, THC Pharm GmbH The Health Concept, based in Frankfurt, Germany, and Spectrum Therapeutics Austria GmbH, based in Vienna, Austria.



With the divesture of C³, Canopy Growth is continuing its evolution into a CPG-modelled organization and furthering its strategy of driving focus and consistent business across its core markets. The Company will continue to leverage its high-quality supply of Canadian cannabis products for the medical channel in its core international markets, including Germany, while also serving adult-use consumers in Canada.

As a result of the divesture, Canopy Growth is expected to avoid future operational complexities associated with C³ and is significantly reducing short-term capital investment requirements.

With the divesture of C³, Canopy Growth is continuing its evolution into a CPG-modelled organization and furthering its strategy of driving focus and consistent business across its core markets. The Company will continue to leverage its high-quality supply of Canadian cannabis products for the medical channel in its core international markets, including Germany, while also serving adult-use consumers in Canada.

With the divesture of C³, Canopy Growth is also eliminating its obligation of separating C3 operations from those of its prior owner, Bionorica SE. As a result, the Company is expected to avoid future operational complexities and is reducing short-term capital investment requirements by over CAD$50M.

"Canopy is maturing as a consumer product company -- leveraging our market focus, innovation, and R&D strength to produce cannabis and cannabinoid-based products that make a positive impact on consumers lives," said David Klein, CEO, Canopy Growth. "We remain committed to serving the medical cannabis market as a channel and will continue to do so by leveraging our existing high-quality supply of Canadian cannabis products to meet patient demand globally. I would like to thank the C³ team members for their hard work, dedication, and commitment to building the successful business that C³ is today."

Transaction Overview

* An upfront payment of EUR80M (approx. CAD$115.5M1), subject to customary cash and debt adjustments, will be made upon the closing of the transaction in addition to an earnout payment of up to EUR42.6M (approx. CAD$61.4M1) subject to the achievement of select milestones by the C³ business.

* Assuming timely receipt of required regulatory approvals and satisfaction of other closing conditions, the transaction is expected to close by January 31, 2022.

* As part of the agreement, all C³ employees will be retained by Dermapharm following the closing of the transaction.