Canopy Growth (CGC 10.74%) has a new CEO -- and investors like that news a lot.
Five months ago, Canopy lost Chairman, co-founder, and co-CEO Bruce Linton when he was terminated in July, after the company reported a loss of a 670.1 million Canadian dollars. That left just one CEO in the corner office -- Mark Zekulin -- and now he's about to go away, too.
This morning, Canopy announced it has appointed David Klein -- until now CFO of Canopy investor Constellation Brands (STZ -0.60%), and even more recently appointed Canopy's chairman of the board -- to become its new solo CEO, effective Jan. 14, 2020.
Investors are applauding the move, and Canopy shares are up 11% as of 10:15 a.m. EST.
With this appointment, Klein will resign from his post as CFO of Constellation on Jan. 13 (being replaced there by Garth Hankinson the same day) and take up his new job as head of the world's biggest marijuana company on Jan. 14. Zekulin will resign from his post as interim CEO of Canopy, and also resign from Canopy's board, on Dec. 20.
And yes, this appears to leave a leadership gap; from Dec. 21 to Jan. 13, Canopy will technically be without any CEO.
That prospect doesn't seem to worry investors, however, and probably rightly so. After all, because Klein is already chairman of the board at Canopy, he can presumably keep on running things from the tippity-top while his new office is made ready.
Even more intriguing is what this switch-up might mean for the future of Canopy as an independent company. This morning, TheFly.com reported that analysts at Cantor Fitzgerald are musing that Klein's appointment as both chairman and CEO increases the likelihood that Constellation will take the next step and acquire Canopy Growth outright to about 66%.
Currently, Constellation owns 35% of Canopy stock. Acquiring the remaining 65% would probably require Constellation to ante up at least $4.7 billion, and probably even more as a takeover premium. Given that Constellation currently only has about $81 million in the bank -- and $13.5 billion in debt -- this prospect seems more worrisome to Constellation investors (its stock is down nearly 1% on today's news) than it is folks who would prefer to see Canopy try to make it as an independent company.