TimMcCracken wrote: Dontbesogreedy wrote: I REALLY like this part of the interview:
'Canopy announced on Monday it will buy out the rest of its BC Tweed joint venture, increasing the company’s greenhouse capacity in British Columbia to up to 3 million square feet at a cost of up to $374 million in Canopy shares. It’s deals of that nature that Linton said make more sense for the company.'
Monopoly money for you;
Here’s a link to an article where the analyst (Martin Landry, GMP) notes that combined, the two facilities are expected to generate more than 150,000 KG of product.
https://www.cantechletter.com/2018/03/canopy-growth-corp-is-still-undervalued-gmp-securities-says/ So let’s run with total production of 150,000KG
66.66% was previously owned by CGC — 150,000 KG * 0.6666% = 99,990 KG
Today they are buying the remaining 33.33% or — 150,000 KG * 0.3333% = 49,995 KG
Lets assume this product can be sold at $5,000/ KG ($5/ gram)
49,995 * $5,000 = $249,975,000 in revenue and we paid $374,000,000 for it
Price to Sales ratio on this is 374/ 249.975 = 1.496 times
So we paid $1.496 for every additional $1 in revenue
Now for Monoploy monies acquisition;
Leafs latest quarter was $11.4 million ... let’s run with that across 4 quarters ... 45.6 million
$3.2 billion purchase price
PS = 3,200/ 45.6 = 70.17 times
ACB paid $70.17 for every $1 in additional revenue.
This may not be apples to apples for reasons such as ACB gets from the deal Established brands, access to leafs existing patients, existing assets, planned future capacity that come with the deal ... I don’t know much about Leaf so can’t really comment.
I like our deal though because that will be some heavy long lasting dilution.
Tim, I looked randomly at Aurora, Medreleaf and Thcx grams yield/sq foot/ year (greenhouse) and they all happen to have around 90 grams yield per sq foot per year. If we apply this to 3m sq feet, it would be 270.000 kg and 33% of that is 89.100 kg x $5 = $445,5m. PS of $374m / $445,5m = 0,84
Bibi