Canopy to acquire Tokyo Smoke parent company

Canopy Growth Corp. is acquiring Hiku Brands Ltd. for around $250 million in an all-stock deal that expands the cannabis grower’s retail footprint and gives it marijuana lifestyle brand Tokyo Smoke.

Shareholders of Hiku, Tokyo Smoke’s parent company, will receive 0.046 of a Canopy share for each of their shares, implying $1.91 per Hiku share, a 33 per cent premium “based on the 20-day volume weighted average (share) prices as of July 9, 2018,” according to a press release on Tuesday.

The deal scuttles a previous $240 million merger between Hiku and licensed producer WeedMD Inc. that was orchestrated back in April.

Hiku has paid WeedMD a $10 million termination fee in order to accept Canopy’s “superior proposal.”

The acquisition is the latest sign of consolidation in Canada’s cannabis sector ahead of recreational legalization in October.

It comes as something of a surprise, given recent statements by Canopy chief executive Bruce Linton implying Canopy wasn’t looking to acquire other publicly traded licensed producers, given steep valuations.

However, Hiku is less of a grower than a brand and retail play.

The company was formed in January by a merger between Tokyo Smoke, a hipster coffee shop and marijuana accessory...

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