Cannabis grower Aurora Cannabis Inc ACB on Tuesday announced a deal that will help it further cement its position as a vertically integrated cannabis company.
What Happened
Aurora signed a binding agreement with Hemp Food and Fiber Inc, or Hempco, to acquire all outstanding shares of the latter it doesn't already own for C$1.04 per Hempco shares in stock. The per share transaction value represented a valuation of C$63.4 million (about $47.5 million USD) on a fully diluted basis.
Why It's Important
Hempco has been in the business of providing quality hemp-based products, hemp fiber and hemp neutraceuticals, marketing brands such Planet Hemp and Praise. It also supplies foods and nutritional supplements for people and animals. With the combined assets, Aurora is well positioned to drive growth through sale of hemp products to more than 100 countries worldwide.
Aurora initially made an investment in Hempco in 2017 and currently owns 52 percent of the outstanding Hempco shares.
Hempco supplies Aurora with low-cost high-volume access to hemp for the extraction of CBD.
"The full integration of Hempco into this infrastructure adds further capacity, brands and distribution channels to capitalize on the global CBD wellness opportunity, which is anticipated to grow to $22 billion by 2022," Aurora said in a press release.
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What Next
Upon completion of the deal, Hempco will become a wholly-owned subsidiary of Aurora and its shares will be delisted from the TSX Venture Exchange.
The deal is expected to close in the second quarter of 2019, with a definitive agreement likely to be signed on or before May 15.
Aurora's was trading higher by 3.4 percent to $8.80 per share Tuesday morning.
Related Links:
Aurora Cannabis Expands South With Acquisition Of Farmacias Magistrales
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