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Canopy confirms $3.4 billion deal to buy Acreage, once cannabis becomes legal in the U.S.

Tomi Kilgore

Canada-based Canopy Growth Corp. confirmed Thursday a deal for the right to buy New York-based Acreage Holdings Inc. in a deal that valued at $3.4 billion, when the production and sale cannabis becomes federally legal in the U.S. Canopy's stock soared 8.7% in premarket trade. MarketWatch had reported Wednesday, citing a source familiar with the negotiations, that the deal for the rights to buy Acreage was "98% done." Canopy said the purchase price represents a 41.7% premium over the 30-day volume-weighted average price of Acreage's subordinate voting shares. The deal includes a $150 million termination fee, payable by Acreage. "Today we announce a complex transaction with a simple objective," said Canopy Chief Executive Bruce Linton. "Our right to acquire Acreage secures our entrance strategy into the United States as soon as a federally-permissible pathway exists." Canopy's stock has run up 59.5% year to date through Wednesday and Acreage's stock has climbed 17.5%, while the ETFMG Alternative Harvest ETF has rallied 36.7% and the S&P 500 has gained 15.7%.