Canopy Growth Corporation will sell its Hershey Drive facility in Smiths Falls, Ontario, to Hershey Canada, Inc. for C$53 million.
The transaction, which is subject to closing conditions, is part of Canopy Growth’s transformation to an asset-light operating model. Canopy Growth will retain its Smiths Falls-based post-harvest manufacturing facility.
"We are pleased to have reached an agreement with Hershey on this important sale,” said Canopy Growth CEO David Klein. “This is the latest milestone in our focused effort to reduce costs and further enhance our balance sheet. Each of the steps we have taken as part of our transformation to a simplified, asset-light operating model supports our ability to deliver in-demand products from brands our customers love, with greater agility and less execution risk. Once again, we have demonstrated Canopy Growth's ability to achieve significant organizational and operational change to position the Company for future growth in the Canadian market."
"Our intent to purchase the Hershey Drive property in Smiths Falls is another example of the strategic investments we're making in our supply chain network and our Canadian operations to support growth," added Jason Reiman, chief supply chain officer, The Hershey Company.
Upon the completion of the transaction, Canopy Growth will have sold seven properties for an aggregate gross amount of approximately C$155 million since April 1. Net proceeds from the sale of the facility will be used to pay down the company's senior secured credit facility.
The sale follows Canopy Growth’s centralization of post-harvest manufacturing at its former beverage facility in Smiths Falls, as well as the consolidation of all flower cultivation at Canopy Growth’s purpose-built sites in Kincardine, Ontario and Kelowna, British Columbia.
By centralizing its core activities in purpose-built facilities and working with contract manufacturers for edibles, beverages and vape products, Canopy Growth said it has optimized its capability to deliver products with greater agility and at improved margins, while reducing execution risks and investment in permanent capacity.