Penny stock Supreme Cannabis Company soars 60% on Canopy Growth merger

• Supreme Cannabis soared 60% on news it will be acquired by Canopy Growth in a $435 million transaction.
• The penny stock jumped to as high as $0.4250 before paring back some gains.
• The transaction will give Canopy a 13.6% total share of the Canadian recreational weed market

Canadian penny stock Supreme Cannabis surged as much as 60% Thursday and trading volume spiked after news that weed giant Canopy Growth will acquire the company in a transaction valued at approximately $435 million.

More than $100 million worth of shares of Supreme Cannabis changed hands as of 3:20 p.m. ET, far surpassing the stock's average trading volume of $12 million, according to Yahoo Finance data.

Shares of the penny stock spiked to $0.4250 before paring back some gains. Meanwhile Canopy Growth fell 5%.

The transaction will give Canopy a 13.6% total share of the Canadian recreational weed market. It will also strengthen Canopy's brand portfolio. Supreme owns a number of cannabis companies including 7ACRES, Canada's number one premium flower brand, according to a company statement.

"Brand growth is anticipated with distribution supported by Canopy's robust sales and distribution network as well as superior consumer insights and R&D capabilities," said a company statement. "In addition to receiving a market premium, Supreme Cannabis shareholders will also benefit from Canopy's US CBD business and conditional positioning for continued exposure to the US market expansion."

According to the statement, Supreme Cannabis shareholders will receive 0.01165872 of a Canopy common share and $0.0001 in cash in exchange for each Supreme Cannabis Share held. The merger provides Supreme shareholders with a premium per share of approximately 66%.