Canadian cannabis company Canopy Growth Corp. on Thursday filed an early warning report on Thursday relating to an option it has acquired, which if exercised, would give it a greater than 10% stake in TerrAscend Corp. Companies are obliged to make such disclosures if they acquire more than 10% of a company. TerrAscend has operations in New Jersey and California. Canopy entered an agreement to acquire the option representing 1.07 million shares of TerrAscend on Wednesday for about $10.5 million. Canopy has already acquired more than 22 million share purchase warrants, which combined with the new option, would give it about 10.9% of TerrAscend. The option will be triggered if there is a change in the legal status of cannabis in the U.S. Canopy already owns 38.9 million exchangeable shares of TerrAscend, and about 29% of its outstanding common shares. “Assuming the conversion of all proportionate voting shares of TerrAscend and the Exchangeable Shares into Common Shares and the exercise of the warrants and the Option held by the Company following the occurrence or waiver of the Triggering Event, the Company would beneficially own, and exercise control or direction over approximately 26.8% of the issued and outstanding Common Shares,” Canopy said in a statement. Canopy has no immediate plans or intentions with regard to TerrAscend, it said. Canopy shares were up 0.5% premarket and have gained 35% in the last 12 months, while the Cannabis ETF has gained 30% and the S&P 500 has gained 16%.
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