After announcing it would drop its flailing sports drink brand BioSteel earlier this summer, Canopy Growth announced Friday it has found two buyers for the brand’s assets through a court-approved agreement. Financial terms were not disclosed.
The BioSteel Canada business – which includes IP, formulas and the bulk of its inventory – is set to be acquired by DC Holdings Ltd., a Canadian sports nutrition portfolio company which does business as Coachwood Group of Companies.
Meanwhile, Biosteel’s manufacturing assets, including property and equipment from the Verona, Virginia production facility it bought from Flow Water last year, have agreed to be purchased by New Jersey-based Gregory Packaging Inc., producers of SunCup juice.
The purchase is exclusively for “factory and machinery assets” from the Virginia facility and will not own any part of the BioSteel brand itself, according to Gregory Packaging owner Ned Gregory.
BioSteel had been a highly touted piece of Canopy Growth’s portfolio, at one point drawing comparisons to an early stage BodyArmor from analysts, but the business was derailed this year after the U.S. Securities and Exchange Commission investigated the company for overstating sales and an internal review led to the exit of key executives.
BioSteel’s lagging sales had also been a drag on Canopy’s overall business. Canopy CFO Judy Hong said in a press release that its decision to stop funding BioSteel led to an immediate elimination of significant operating loss and cash burn. Anticipated proceeds from the sale are expected to provide a boost to Canopy’s balance sheet.