A Look at ACB’s Acquisitions So Far

On November 12, Aurora Cannabis (ACB) chairman Michael Singer told CNN Business about his plans to rapidly increase the company’s presence in the US in the next few quarters. The company has disclosed its plans to acquire US players in the hemp-derived CBD space. The FDA’s recent warning about the potential risks associated with CBD, however, may prove to be a dampener on ACB’s US CBD ambitions.

On July 24, ACB entered into an eight-year partnership with a professional mixed martial arts league UFC (Ultimate Fighting Championship). The two parties will conduct clinical trials to study the efficacy of CBD in wound care, inflammation, injury, pain, and recovery for athletes. ACB and UFC will use the results to develop a hemp-derived CBD-based topical treatment line for athletes.

ACB’s foray into the US CBD space has yet to yield commercial results. However, the company has managed to successfully penetrate several cannabis-based segments through a focused inorganic growth strategy. The deals, however, have also led to significant equity dilution for the company. Let’s see how ACB has rapidly increased its scale and broadened its portfolio through several targeted acquisitions.

The company completed the highest-priced deal in the history of the cannabis industry

In May 2018, ACB announced its all-share acquisition of MedReleaf for a total consideration of 3.2 billion Canadian dollars. Investors received 3.575 common shares of ACB for every share of MedReleaf. The deal priced MedReleaf’s common share at 29.44 Canadian dollars. This price was a 34% premium to ACB and MedReleaf’s 20-day volume-weighted average prices on theToronto Stock Exchange as of May 11, 2018. Subsequent to the deal, ACB and MedReleaf shareholders owned 61% and 39%, respectively, of the combined company.

This deal aimed to significantly increase ACB’s production capacity while reducing production costs. ACB also aimed to expand its distribution infrastructure in Canada and international markets and strengthen its research portfolio.

In February, ACB secured Health Canada licenses for the production and sale of cannabis and cannabis derivative products at the Aurora Sky and MedReleaf Bradford facilities. The company had estimated Bradford’s annual production capacity to be 28,000 kilograms.

However, the MedReleaf acquisition has also increased ACB’s goodwill by 2.09 billion Canadian dollars. ACB had goodwill of 3.17 billion Canadian dollars as of September 30. In this backdrop, a potential goodwill write-down for MedReleaf may have an impact on ACB’s stock price.

ACB bolstered its international presence by acquiring CanniMed and ICC Labs

In May 2018, ACB completed the acquisition of CanniMed Therapeutics to expand in the domestic and international medical marijuana markets. In January 2018, the company announced a consideration of 1.1 billion Canadian dollars for acquiring CanniMed. The deal bolstered the company’s production, branding, and research capabilities in the medical cannabis space. It also increased Aurora’s medical marijuana patient share.

In September 2018, ACB announced an all-stock deal to acquire South America–based ICC Labs for a consideration of 290 million Canadian dollars. The deal gave ACB access to Uruguay, which was then the only country to have legalized recreational marijuana. ICC Labs accounted for 70% of Uruguay’s marijuana market. The deal also expanded ACB’s presence in the medical cannabis market in Colombia. Besides increasing ACB’s low-cost production capacity, the deal strengthened the company’s position in the CBD wellness markets in Uruguay and Mexico.

ACB also expanded its branded portfolio by acquiring Whistler Medical

In March 2019, ACB announced the completion of the acquisition of Whistler Medical Marijuana for a consideration of 175 million Canadian dollars. Besides expanding the company’s production capacity, this deal has added a profitable business and well-known brand to ACB’s portfolio. ACB also got access to more than 30 commercialized cannabis flower varieties as well as oil products associated with specific cannabis strains. Whistler Medical boasts a genetic bank with more than 150 strains of cannabis. The transaction strengthened ACB’s position in Western Canada, especially in British Columbia. Finally, the deal also added organic-certified, good-manufacturing-practice-compliant production facilities in the EU. These facilities are playing a vital role in the company’s Europe penetration strategy.

Aurora Cannabis acquired Hempco Food and Fiber to bolster its presence in the CBD and organic hemp markets

In August, Aurora Cannabis completed the acquisition of Hempco Food and Fiber for a total consideration of 63.4 million Canadian dollars. The deal added hemp-based food and nutritional supplement brands Planet Hemp and Praise to ACB’s portfolio. The company also secured Hempco Food and Fiber’s almost-complete state-of-the-art hemp processing facility at Nisku. This facility is spread over 56,000 square feet and can produce up to 2.9 million kilograms of hemp annually. The company aims to leverage this access to low-cost and high-volume hemp to extract CBD, which has many applications.

Aurora Cannabis acquired multiple smaller entities to create infrastructure for hemp business

Aurora Cannabis has created Aurora Hemp, an end-to-end infrastructure spanning all areas of the hemp value chain. The Hempco Food and Fiber acquisition increased ACB’s hemp production capacity and broadened its hemp-based product portfolio. ICC Labs gave the company access to high-CBD hemp strains.

In September 2018, Aurora Cannabis acquired Agropro UAB, the largest European organic hemp producer, processor, and distributor. The company also acquired another hemp processor and distributor, Borela UAB.

In August 2018, the company acquired cannabis-focused science company Anandia Laboratories. The deal strengthened ACB’s research capabilities in genomics, plant breeding, cultivar certifications, and quality testing.