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How much is that MSO in the window?

Originally posted April 25th, 2019 by Mollytime

 

Well, CGC ($WEED) has been busy wrangling more deals up – this one a contingent option on a US based MSO. How much did CGC’s shareholder’s pay for it?

Relatively straightforward – CGC paid a $300MM USD premium for the right to buy Acreage Farms for a whopping .5818 shares on the barrelhead.

Some shmoes are pricing it out at current share price – which comes in around $3.4B. Challenge is – it’s a moving target. And a contingent option to be clear (let’s not forget that). The hair on this isn’t the Acreage option per se, it’s in the details of the Constellation adjustment.

Their warrants were both accelerated and compressed in the deal.

Funny how no ‘analysts’ priced that or even commented on it. It’s as precious as Constellation buying 50% of CGC for $400MM.

Yep. Shareholders are simply along for the ride.

As a fan of logic, I’m a fan of the phrase ‘but for’. As in,” ‘But for’ an event, there is nothing”.

CGC is ‘but foring’ their pickup of an option to buy a company on a contingent basis. In my head – whoop-dee-do.

Dealmaking is simple if you’ve got nothing to lose. And a company that appears to have issues growing dope will be lifted up by not only doing deals with those that can, but is also building out a product/brand suite that obscures the fact they can’t grow it themselves.

Heck, Adidas doesn’t manufacture the shoes they sell, no reason why a dope company can’t do the same.

CGC is a bow cutting water at this point, and their leverage requires an ever increasing expansion of promised revenue. They’re doing exactly what needs to be done to placate existing shareholders.

Whether that’s actually in shareholders interests….time will tell. Another inventory write-down – the third successive – will also be a tell. It’d be nice of the ‘analysts’ out there on the conference calls ask the question, rather than pandering to the ring-tone.

Shlepping and sherpa-ing cash to floats is what many of the ‘analysts’ do. It would be nice if they’d actually analyze the destination for it, rather than fawning over ‘dealmaking’.

Nothing here to see except for ‘potential’. And I can assure you – the US market is primed for entrants seeking to exploit ‘potential’.

This is way too much spend for ‘potential’ imho. Especially in an MSO that is all promises as well. Seeing Constellation light up CGC shareholders again – while providing only a name and a bank account – will get old after awhile. If that sounds weird on the ear right now, give it a year.

Honest.

At least until the next big deal kicks the can again.

The preceding is the author’s opinion, and in no way constitutes a recommendation to buy or sell any security or derivative. The author holds no position in CGC.