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Aurora Cannabis to acquire Reliva for USD 85mn
Posted on Friday, 22 May 2020 06:18
Aurora Cannabis has agreed to acquire Reliva, a seller of hemp-derived cannabinoid (CBD) products in the US, for USD 85.00 million in stock.
Under the terms of the deal, the target will receive USD 40.00 million in an upfront payment of the buyers shares, as well as a potential earnout of USD 45.00 million in scrips, cash or a combination thereof, over the next two years upon achieving certain financial targets.
The structure of the additional payment is designed to align risk and reward between Aurora shareholders and Reliva management to focus on continued strong operational and financial execution.
Completion is subject to the usual raft of conditions and is expected to occur in the June 2020.
The addition of Reliva is expected to boost Aurora’s adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) consistent with the buyer’s plans to be EBITDA profitable in the first quarter of 2020.
As part of the deal, the companies will join their Canadian recreational brands and European medical market position with the leading US hemp-derived CBD brand in retail stores.
The transaction will create a large and diversified pure-play international CBD company.
According to the Brightfield Group, as cited in the press release, CBD is expected to be as large as USD 24.00 billion at retail in 2025.
Reliva ranked as the number one in topicals and number two overall market share, a report by IRI Worldwide said, with product availability in over 20,000 locations via e-commerce.
CBD companies have become more popular in recent years as many consumers opt for more natural products when it comes to skincare, haircare and health.
Yesterday, Pressure BioSciences announced that its pending merger partner Cannaworx has agreed to acquire Louisiana-based Five Leaf Labs to expand sales and distribution network as the company anticipates the launch of their first two products in the coming weeks.
Aurora is a global leader in the cannabis industry serving both the medical and consumer markets.
The buyer’s largest acquisition to date took place in July 2018 when it purchased MedReleaf for CAD 3.20 billion.
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