Aurora Cannabis Acquires Controlling Interest In Greenhouse Tech Experts, Bevo Farms

Aurora Cannabis Inc. ACB ACB, announced that a wholly-owned subsidiary of the company has acquired a controlling interest in Bevo Agtech Inc., the sole parent of Bevo Farms Ltd., one of the largest suppliers of propagated vegetables and ornamental plants in North America. Concurrent with closing of the Bevo transaction, Bevo entered into an agreement to acquire the company's Aurora Sky facility in Edmonton, Alberta through the acquisition of one of Aurora's wholly-owned subsidiaries.

The transaction allows Aurora to immediately benefit from a profitable, cash flow positive and growing business, and may have the potential to drive long term value to Aurora's existing cannabis business via the application of Bevo's plant propagation expertise. Aurora, through its wholly-owned subsidiary, will acquire 50.1% of Bevo's outstanding common shares, take a controlling position on Bevo's board of directors and financially consolidate Bevo. Bevo's experienced management team are to remain significant shareholders and stay in place to embark on a robust growth plan, including the use of the Aurora Sky facility for orchid cultivation and vegetable propagation.

Founded in 1986, Bevo operates 63 acres of greenhouse in British Columbia, Canada; is led by a management team with over 85 years of agricultural experience, and supplies greenhouses, nurseries, field farms and wholesalers. For the twelve months ended June 30, 2022, Bevo has achieved revenues of $39 million and adjusted EBITDA of $9 million. Bevo's business exhibits seasonality driven by agricultural grow cycles, with the strongest financial period being from January to June.

"This investment once again demonstrates our disciplined capital allocation approach and is consistent with both our short term needs and long-term vision to be the leading global cannabis company. Bevo's track record in generating not only positive adjusted EBITDA but free cash flow, world class propagation expertise, and established distribution networks in Canada and the United States makes them an ideal strategic partner," stated Miguel Martin, CEO of Aurora. "We expect this investment and collaboration between industry leaders will drive significant shareholder value and synergies for both parties. We are also excited about Bevo repurposing Aurora Sky and the potential to expand the scale and scope of their business and saving significant costs previously expected in connection with the wind down and sale of the facility".

Transaction Details

Aurora is purchasing its controlling interest in Bevo from certain of Bevo's existing shareholders. Total cash consideration paid by a subsidiary of Aurora on closing was approximately $45 million. Up to an additional $12 million shall be payable by a subsidiary of Aurora to the Bevo selling shareholders over the three years following closing of the Bevo transaction, conditional on Bevo successfully achieving certain financial milestones at its Site One facility in Langley, which additional amounts may be satisfied, at Aurora's option, through the issuance of Aurora common shares, subject to approval of the Toronto Stock Exchange.

Up to $25 million could be payable over time by Bevo to Aurora in connection with the Aurora Sky transaction, based on Bevo successfully achieving certain financial milestones at the Aurora Sky Facility. Closing of the Aurora Sky transaction is conditional upon receipt of certain third-party consents.

Photo: Benzinga; Sources: courtesy of geralt, lindsayfox via Pixabay

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