Constellation tightens grip on Canopy with CEO appointment

Reuters — Constellation Brands finance head David Klein will take over in January as CEO of pot producer Canopy Growth Corp., hardening up the Corona beer maker’s control of a company into which it has sunk US$4 billion.

Klein was appointed Canopy chairman in October after Constellation booked a $430 million net loss related to the company (all figures US$). He replaces company co-CEO Mark Zekulin who took over the top job from founder Bruce Linton in July.

Linton had said that he was fired from the top job, days after Constellation expressed its disappointment over Canopy’s 2018 results.

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Canopy’s U.S.-listed shares were up 3.3 per cent at $19.36 premarket, while Constellation shares were broadly unchanged.

Canada’s new brand of pot producers have all struggled to deliver in the first year of the legalization and shares in most have sunk since March. An ETF tracking Cannabis stocks has lost more than half its value since then.

Constellation Brands bought into Canopy’s shares and warrants in 2017, betting on the proposed legalization of recreational weed in several countries.

Canopy’s finance chief, Mike Lee, was previously senior vice-president and chief financial officer for Constellation’s wine and spirits unit.

Constellation said in October that it was “pleased with the progress of the Canopy team and what they have done in the last few months.”

Earlier in the day, Cantor Fitzgerald analyst Pablo Zuanic said he was surprised that it has taken this long for Constellation Brands to appoint a new CEO at Canopy, adding that there was more than a two-thirds probability to Constellation putting in a bid for Canopy in the near term.

Separately, Constellation said on Monday senior vice-president Garth Hankinson will take over Klein’s role at the company.

— Reporting for Reuters by Shanti S Nair and Shariq Khan in Bangalore.

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