Pot producer Canopy to sell German pharma unit C3 on COVID-19 hit (updated)

Dermapharm Holding SE

15/12/2021 18:56

(Adds shares, details from statement, background)
    Dec 15 (Reuters) - Canadian pot producer Canopy Growth Corp
 WEED.TO   CGC.O  said on Wednesday it would sell its German
pharmaceuticals unit, C3 Cannabinoid Compound Co GmbH, to a
local firm as revenue took a hit due to pandemic-related
restrictions in the country.
    Shares of Canopy were down 3.4% at C$8.85 in afternoon
trading.
    The Ontario-based company said https://bit.ly/3snKymn it
would get an upfront payment of about C$115.5 million ($89.51
million) from German pharmaceutical firm Dermapharm Holding SE
 DMPG.DE  once the deal closes in January, and up to C$61.4
million in a milestone-based payment.
    That is lower than the C$342.9 million Canopy paid in 2019
to buy C3, which it had often described as "transformational" to
its business.
    Recent COVID-19 lockdown measures in Germany due to soaring
virus cases restricted people's ability to visit doctors and
pharmacies, and dented C3's revenue in the past few quarters.
    Sales in the unit fell 13% to C$11.9 million, according to
Canopy's second-quarter earnings report. 
    The divesture will help avoid future operational
complexities associated with C3 and reduce short-term capital
investment, Canopy said, adding that all C3 employees would be
retained by Dermapharm.
    "We remain committed to serving the medical cannabis market
as a channel and will continue to do so by leveraging our
existing high-quality supply of Canadian cannabis products to
meet patient demand globally," said David Klein, chief executive
officer of Canopy.

($1 = 1.2903 Canadian dollars)

 (Reporting by Arunima Kumar in Bengaluru;
Editing by Vinay Dwivedi and Ramakrishnan M.)
 ((Arunima.Kumar@thomsonreuters.com; Twitter: https://twitter.com/Aru_Kumar94
 ;))