Canopy Growth buys German medical cannabis company for $343M

Henrietta Strickland
May 4, 2019

"Through this acquisition, Canopy will acquire numerous benefits of that the German tender would have: approved operations within Germany, distribution and relationships with German pharmacies/patients, and a route to sales growth".

"Somewhat surprisingly, given their historic sales performance in Germany, Canopy was not awarded a lot, and it seems this move goes some way to addressing the snub in our view", Bennett wrote in a note to investors.

Through this transaction, Canopy Growth will expand further in the European markets and will be able to access C3's knowledge and intellectual property that has been developed over nearly 20 years of research.

Reportedly, the chief medicinal offering of C3 is dronabinol - a pure chemical compound with uniform concentrations of tetrahydrocannabinol (THC). Canopy said that adding dronabinol to its product offering in Europe and potentially other key markets will allow the company's medical division, Spectrum Cannabis, to present an expanded, medically validated suite of cannabinoid therapies to the benefit of healthcare professionals and patients.

C is Europe's largest cannabinoid-based pharmaceutical company and is backed by herbal medicine giant Bioronica SE. Dronabinol is a prescription drug in Germany, Austria, Switzerland and Denmark, being used as an appetite stimulant, antiemetic and sleep apnea reliever. It is an active ingredient in Cannabis that has diversified utility in developing medical products with pharmacological effects. Moreover, it has vast potential in treating cancer pain. "Furthermore, C's infrastructure including production, distribution, and sales & marketing significantly adds to the Spectrum Cannabis footprint in Europe, including an expanding product line and additional reach into pharmacy and medical specialists' networks", said the company. In Germany, dronabinol can be prescribed for any type of chronic pain and for any condition in palliative care.

The statement noted that C has a total of five medicines in the market and its commercial operations generated €27.1 million (CDN $41.5 million) in 2018.

Along with its series of acquisitions in the USA, over the last few months, the Canopy Growth Corporation has made some major strategic acquisitions in the key European market. Besides acquiring C3, it also acquired Spanish licensed Cannabis producer Cafina in April 2019.

As the acquisitions of C3 will enable the Canopy Growth Corporation to accelerate its European expansion strategy, it will certainly have a positive impact on the bottom line of the company in the coming quarters. Such divergence supports a bullish thesis. Hence, there is a good possibility that we will see the stock breaking above the $52.00 per share level in the coming days.

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