Bruce Linton’s deal means you are exactly where you need to be…
The separation between Bruce Linton and Canopy Growth Corp. (NYSE: CGC) was a bit of a surprise back in July.
Now, with the dust settled a little bit more, everything is falling into place for both parties.
With the appointment of David Klein as CEO, Canopy has someone who is known on Wall Street for taking a deep dive into financials and increasing profitability.
Linton, who was an integral part of Canopy becoming the biggest cannabis company in the world, now has the opportunity to scale Vireo Health International Inc. (CSE: VREO) into a powerhouse as Executive Chairman.
According to the CEO of Vireo, Kyle Kingsley, M.D., the two had been in contact ever since Linton and Canopy parted ways. Kingsley had reached out first and the two quickly realized they had great synergy.
What’s the Big Deal with Vireo?
Asked about the move, Linton revealed in a recent interview that he joined Vireo specifically because “this is a science-backed marijuana company that met my criteria for best practices and a valid methodology.”
He has made it clear that he is more interested in the quality of Vireo’s products, not their visibility (or lack thereof).
Founded by physicians, Vireo is a multi-state operator (MSO) with locations that include Arizona, Maryland, Minnesota, New Mexico, New York, and Pennsylvania with plans to enter Massachusetts, Nevada, New Mexico, Rhode Island, and Puerto Rico.
It only generated $7.2 million of revenue in the latest quarter but, even as a smaller player in the cannabis game, Vireo offered a pretty aggressive deal that should benefit shareholders in the long term…
What Bruce Linton’s Deal Means for You
Through his contract, Linton has warrants to buy approximately 9% of the company at $1.04 per share. He accepted 2.5 million warrants to purchase shares at $3.81, and another 2.5 million warrants to purchase shares at $5.86.
Around the time of the deal, the $3.81 share price assumed the stock will go up 275%, while the $5.86 share price assumes the stock will go up 475%.
That may sound a little complicated, but here’s what it really means.
Linton is not going to buy shares at a price of $3.81 or $5.86 when the stock is trading at a little over $1.30 per share. He is incentivized to get the stock price much higher.
If he can get the stock price to $5, he can buy in at $3.81, which is a discount of 30%.
He essentially gets a time machine and can go back and buy the stock when it was cheaper!
It’s the same thing for the warrants at $5.86. The higher he can send the stock price past $5.86, the cheaper the stock is for him to buy.
Linton could make millions with these warrants. If he gets the price up to $4 per share, he will have made upward of $30 million – and if he gets the price up to $6 per share, he’s looking at about a $55 million payday.
He wouldn’t have accepted this deal if he didn’t think he could make that happen.
This is exciting news for shareholders. It means that Linton has a multimillion-dollar incentive to get Vireo’s share prices to go up to nearly $6 if he wants to make the most of this deal.
It also looks promising for the bigger picture of the cannabis market. If Linton believes a small company like Vireo’s value can grow that much, imagine what that will mean when the rest of the industry follows suit.
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6 responses to “Bruce Linton’s New Contract Proves We’re Going in the Right Direction”
December 28 2019