Beverage maker and distributor Constellation Brands Inc. (NYSE: STZ) and Canadian marijuana grower Canopy Growth Corp. (NYSE: CGC) announced that Constellation will increase its ownership stake in Canopy by acquiring 104.5 million shares at a price of C$48.60 per share. The investment is valued at just over C$5 billion ($4 billion in U.S. dollars).

According to the announcement, the price represents a 51.2% premium to Canopy’s closing price Tuesday night. Shares soared 50% in premarket trading Wednesday morning.

Once the deal is completed, Constellation will own approximately 38% of Canopy, assuming Constellation exercises Canopy warrants it already owns, and will be empowered to nominate four directors to Canopy’s existing board. Constellation also receives 139.7 million additional warrants that, if exercised within the next three years, would result in an additional C$4.5 billion investment in Canopy. If Constellation exercises all the warrants, its stake in Canopy will exceed 50%.

Constellation acquired a 9.9% stake in Canopy last October with an investment of C$245 million. The beverage giant paid about C$13 a share for 18.88 million shares and an equal number of warrants. The first of two exercise dates on these warrants was August 1, 2018, and the second is February 1, 2019.

Rob Sands, Constellation’s CEO, said:

Through this investment, we are selecting Canopy Growth as our exclusive global cannabis partner. Over the past year, we’ve come to better understand the cannabis market, the tremendous growth opportunity it presents, and Canopy’s market-leading capabilities in this space.

Canopy co-CEO, Bruce Linton, added:

Our business can now make the strategic investments required to accelerate our market position globally. Constellation’s concentration of global cannabis activities exclusively through Canopy, coupled with the investment and its expert capabilities in brand-building, marketing, consumer insights and M&A will be a huge benefit as we look to expand our portfolio in Canada, the United States and emerging cannabis markets around the globe.

Over the past 12 months, Constellation’s shares have added about 11.6%, while Canopy’s have jumped by more than 250%.

Constellation’s shares dropped about 2.4% in Wednesday’s premarket to trade at $216.50, in a 52-week range of $195.89 to 236.62.

Canopy’s shares traded up nearly 50% to $36.78, above a previous range of $16.74 to $36.55.

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