TimMcCracken wrote: Buckshot26 wrote: Tim, for cash I would agree it would be stupid. For shares it is clearly accretive. More so for ACB but also for Canopy at 100m shares as you said.
For Canopy your diluting by almost 50% but gaining about 60% in revenues. You are getting a second ticket in the Germany lottery, and getting superior product (gentics and yield). But, and way more importantly, you mainain your Canadian dominence which flies out the window if ACB gets LEAF.
TimMcCracken wrote: Bwayne420 wrote: It says that because Bruce said he is not looking to acquire any domestic LPs
Canopy has enough infrastructure now domestically seams like they are focusing on international.
ACB will dilute it self in to irrelevance if they attempt this deal. They have minimal cash flow barely enough production compasity to feed the Yukon. I would be pissed if I were a share holder with them.
Canopy dose not need to pay the inflated price for an LP. Think about what it cost them to buy the BC green houses and convert?
I agree with you Bwayne.
I would not be happy if CGC bought them ... it would cost approximately 100,000,000 shares or a 50.25% dilution and a 46.08% dilution on a fully dilutive basis ... this is crazy.
To put it into presepective the all time high market cap of $8.448b (@$44/ share) would be equivalent to $28.16 ... a move like that would cause way too much short and medium term downward pressure.
Thanks for the input Buck.
I am just not a fan of a dilution that big because I don’t think it would offer enough value.
It’s good for the company getting acquired because they will likely have an offer 30%+/- above their market price, but bad especially in the short to medium term for the acquiring company.
Look at the Bedrocan deal, it cost Canopy $60,000,000 +/- which sounds incredibly cheap compared to industry value today. However, we paid for it in shares which we now carry forever. The Bedrocan deal cost longs 34,000,000 shares, now those 34,000,000 shares are worth over $1,008,100,000 Today.
If it was bought in cash and with out those 34 million shares based on today’s market cap our share price would be $35.75 or 21% higher.
That means theres $1 billion dollars less to be split amongst the longs, it was taken out of our future pockets. As I always say, who are we to complain when the returns have been so good over the past 3 years.
I know this may sound like peanuts but it compounds even more over time.
I have found since constellation has been involved dilution has been kept to very minimal transactions, I feel as if they are held more accountable now that constellation has a stake, especially if CGC is in weekly contact with them (as Bruce stated last interview).
In my opinion the company has done a great job minimizing dilution over the years. Since I made my first investment in Tweed the company has added 167 million shares on a fully diluted basis and 66% of those shares were done with 3 major transactions;
constellation brands : 37.8 million shares
mettrum : 36 million shares
Bedrocan : 34 million shares
total for 3 transactions : 107.8 million shares a market value today of $3.2 billion
I know market conditions and timing and blah blah blah all factor in. But at this stage I would love to see a strong focus on keeping the share count low as possible.
I appericate the strategy over the years was growth by acquisitions (and it has paid off) so I do expect more dilution, however it’s got to be the types of deals that are too good to pass up in my opinion.
I don’t think we just got to buy because we are afraid ACB might.
Just my opinion of course.