Yahoo Finance Constellation’s ‘rockstar’ remarks about Canopy fuel pot stock gains
Constellation Brands Inc. (STZ.N) is totally stoked about its Canadian bud buddy, Canopy Growth Corp. (WEED.TO).
The Corona beer-maker’s president and chief operating officer boasted that last month’s multi-billion dollar investment in the Smiths Falls, Ont.-based marijuana giant is part of a plan to lead the way in a global market worth as much as US$200 billion dollars “in fairly short order.”
Bill Newlands also called Canopy’s Bruce Linton a “rockstar CEO,” with a management team and business strategy “positioned to win.”
The glowing remark at the Barclays Consumer Staples Conference in Boston added fuel to a pot stock rally on Wednesday afternoon.
“Now is the time to be out front and create that opportunity for Canopy to continue that market leadership that they have in Canada, but also be prepared to enter other markets as aggressively as humanly as possible where it is legal,” Newlands told attendees.
Constellation’s $5 billion stake in Canopy sent shares of the world’s largest cannabis producer soaring, along with a number of its pot producing peers, after the deal was announced on Aug. 15.
Constellation’s Chief Financial Officer David Klein said the company’s decision to take a controlling interest in Canopy was an obvious decision done at the right price. The Victor, New York-based beverage company agreed to pay about $245 million for a 9.9 per cent stake in Canopy last October.
“We were intending to deploy capital into the cannabis space in any event. For us, instead of competing with the best in the world that we already partnered with, it just made sense to throw in with them,” Klein said. “We’re comfortable with the return that we get at the valuation that we provided for the business.”
Newlands and Klein downplayed the notion that the company’s aggressive push into cannabis was motivated by the risk of waning alcohol consumption, or marijuana’s potential to cannibalize booze sales.
“Our core business is very healthy,” Newlands said. “This was actually a very offensive attack, but certainly there could be an element of defence in it somewhere down the road.”
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