Cronos Group Up Over 40% This Month, Strikes Deal with CIBC and BMO

Cronos Group

Cronos Group Inc. (TSX:CRON) (NASDAQ:CRON) has seen significant share gains since the start of 2019. To date, CRON stock is up over 40% on both NASDAQ and the Toronto Stock Exchange. Most major cannabis stocks are seeing similar stock gains but what makes CRON stand out from the rest?

Let's take a closer look!

Cronos Group's Rapid Expansion

Originally Cronos was called PharmaCan Capital Corp. The company is a principal investment firm that switched from investing in pharmaceutical companies to investing in cannabis companies. What makes Cronos Group stand out from the rest of the major cannabis stocks on the market is that it invests in companies.

The company isn't primarily responsible for supply-demand, cultivation, permits, and all the other responsibilities other cannabis companies hold. Cronos is an equity investor that seeks to make minority investments with appropriate governance and shareholder rights. The company's main concern is the direction and day-to-day operations of the cannabis companies it invests in.

In December, the biggest announcement surrounding Cronos was released to investors. Altria Group, Inc. (NYSE:MO), a major tobacco giant, agreed to invest $2.4 billion CAD into Cronos Group. This deal is set to close sometime in the second half of 2019. Why this is great for the cannabis company is that Altria will now own a 45% equity stake in the company and bring in four directors of their choosing.

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Altria's current portfolio includes companies such as Marlboro, Black & Milk, Copenhagen, Skoal, and MarkTen. 

In addition to the Altria deal, Cronos announced yesterday that it just signed a credit agreement with CIBC and the Bank of Montreal (BMO). Both banks will lend a $65 million secured non-revolving term loan credit facility. Cronos Group intends to use the funds to repay the company's existing loan facility and prepare for the Altria equity investment.

CRON Stock Movement

According to Yahoo Finance, CRON is currently trading at $15.55 a share, up +$0.83 (+5.64%) on NASDAQ. On the TSX, CRON is trading at $20.87 a share, up +$1.17 (+5.94%).


Featured Image: Depositphotos © leungchopan

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