Canadian rope trick

7 December 2018 By John Foley Follow @johnsfoley

Marlboro maker Altria is spending $1.8 billion – more than a 40 percent premium – for a 45 percent stake in pot grower Cronos. The valuation is both high and irrelevant. Cannabis is beginning to adopt Silicon Valley’s belief that the winner is whoever has the most cash.

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Altria agreed to spend $1.8 billion, or C$16.25 per share, on a 45 percent stake in Canadian cannabis producer Cronos, it said on Dec. 7.

The U.S. tobacco group will buy shares at a 41.5 percent premium to their 10-day average price before Nov. 30, when Cronos said the two were in talks.

Altria would also get a warrant to take its stake up to 55 percent at a price of C$19 per share, roughly a two-thirds premium to the same 10-day average price.

Constellation Brands said on Aug. 15 that it would invest $4 billion for shares and warrants in Canopy Growth, another Canadian cannabis company.

That earlier deal was struck at a 37.9 percent premium to Canopy’s five-day average share price at the time.

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