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Canopy Growth and Acreage shareholders to vote on acquisition deal on June 19

A worker pushes a cart of marijuana plants at the Canopy Growth Corporation facility in Smiths Falls, Ontario, Canada, January 4, 2018. REUTERS/Chris Wattie

Canopy Growth Corp. (WEED.TO) and Acreage Holdings Inc. (ACRG-U.CN) shareholders will vote on the Canadian cannabis giant’s plan to acquire the U.S. multi-state operator on June 19.

The two companies announced on Thursday that they have filed their respective management information circulars and related voting materials regarding the proposed acquisition announced last month.

The deal hinges on cannabis becoming “federally permissible” in the United States.

“Canopy Growth shareholders will benefit from accelerated and turnkey access to the U.S. cannabis market upon the closing, following the triggering event,” Canopy Growth stated in a news release on Thursday. “Acreage shareholders will benefit from Acreage's ability to achieve its growth strategy with reduced cost of capital based on Canopy Growth affiliation.”

If the deal proceeds, Acreage shareholders will receive an immediate upfront cash consideration on an as-converted to subordinate voting share basis of approximately US$2.51 - $2.63 per share. Each Acreage share will be converted into 0.5818 of a common share of Canopy Growth, representing a premium of approximately 40 per cent over the 30-day volume weighted average trading price.

Canopy Growth announced its intention to acquire Acreage Holdings in a $3.4 billion deal on April 18.

The deal, believed to be the first tie up between cannabis players in the U.S. and Canada, has been heralded as a milestone for the cannabis sector. It has also come under fire from the U.S. hedge fund Marcato Capital Management, which owns roughly 2.7 per cent of Acreage’s outstanding shares.

The San Francisco-based activist investor said in a letter that it believes the gains are “unbelievably lopsided” in Canopy’s favour.

“The Companies believe that the Transaction will deliver significant benefits that will help accelerate the growth of Acreage across the United States powered by the expertise of the world's leading cannabis company,” Canopy said in the release. “In turn, Canopy Growth shareholders will benefit from a national turnkey platform in the U.S.”

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