Acreage Holdings ACRGF

RE:RE:RE:RE:RE:RE:The real deal

[Countrygent]

The deal has to be approved by 2/3 of the shareholders of each class of ACRG pursuant to the Arrangement transaction under BC company law - a more flexible form of amalgamation.  It requires a Court determination it is “fair”.  Accordingly, the transaction has to be valued and a fairness opinion delivered by an “expert” (ie.  a flak brokerage or investment banker),  as well as by an independent committee of the Board of Directors because Murphy and management hold effective management voting control.  All normal stuff as opposed to a takeover bid by Canopy - typical friendly negotiated transaction with the big share blocks already locked-up, and a break fee penalty payable by ACRG if they can’t deliver.

This so-called controversy about the price being fixed etc., is a misunderstanding of the purpose of describing the value of the transaction.  The main reason a value is given and reference is made to the average trading price of ACRG over the preceding month is to provide a description of the premium to market the deal offers “AT THE TIME fairness is assessed and approval of the shareholders and BC Supreme Court is sought.

The consideration being offered is $2.55 a share payable this summer assuming approval according to schedule in June, plus 0.5818 per share of ACRG to be exchanged at a future date.  Of course in the meantime both ACRG and Canopy’s share prices will fluctuate.  The exchange ratio is fixed.  So if ACRG or Canopy’s trading prices change, it makes no difference to the deal.  There is no cap on Canopy’s value that’s no cap on the eventual value of the offer.  But it has to be described and valued as at the time of approval, that is the reason for using the average prior trading price.  It is just a snapshot valuation because both the securities being exchanged of course fluctuate every day, including CDN/USD exchange rates.  But the exchange ratio is fixed.  On legalization, if Canopy is worth $1000 a share, every share of ACRG will still receive 0.5818 Canopy shares - at that time hypotheticals cal consideration would be $581.80 CDN plus the $2.55 USD received summer 2019, plus notional interest on the cash.

For those of you who have trouble accepting this is the deal, you are going to get a big fat proxy solicitation in later May or earlier June.  Given how many don’t seem to read condensed NR’s very carefully, they probably abbot won’t read that very carefully either.  But it will explain it at length and include the report of the independent committee of the board, plus the fairness opinion of their advisors.

i could really care less what a bunch of lazy readers do, consider this explanation a final act of charity.  

I think it it is a great deal and will be voting to approve.  My whole little pile.

cg