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Aurora’s ambition grows with MedReleaf
Posted on Monday, 14 May 2018 13:16
Aurora Cannabis has won over the board of MedReleaf with an all-scrip offer that values the British Columbia-based medical cannabis producer at CAD 3.20 billion (USD 2.50 billion).
The public takeover to bring together two operators with a total funded capacity of more than 570,000 kg per year through nine facilities in Canada and two in Denmark implies a price of CAD 29.44 apiece.
Aurora’s proposal represents a premium of 34.0 per cent to the 20-day volume weighted average price and provides MedReleaf shareholders with a 39.0 per cent of the pro forma company on a fully diluted basis.
Benefits of the combination include low production costs and high-yield cultivation, extensive distribution channels and home and abroad, increased diversification, and brand leadership.
Domestically, the two already have partnership agreements with Alberta 's Alcanna, Quebec 's SAQ, Pharmasave and Shoppers Drug Mart.
Internationally, the companies are boosting their geographical footprint on five continents, including countries such as Germany, Italy, Brazil and Australia, and intend to continue to pursue this expansion.
The combined entity expects to have an enhanced capital markets profile, which will appeal to a broader investor audience, improve trading liquidity and increase weighting in index tracking portfolios.
Aurora is already blazing a trail with regards to industry consolidation, having announced nine acquisitions and seven strategic investments in the past two years alone, one of which completed in January 2018.
Zephyr, the M&A database published by Bureau van Dijk, shows the group’s purchase of domestic rival CanniMed for CAD 1.10 billion was, at the time, the largest by value within the medicinal marijuana category.
Aurora’s latest expansion drive eclipses this January deal, which is one of 116 announced or completed acquisitions of a licensed Canadian cannabis producer to date, according to Zephyr.
© Zephus Ltd