MedReleaf Corp MEDFF and Aurora Cannabis Inc ACBFF said Wednesday they've closed the largest transaction completed in the cannabis industry to date with the merger of the two companies.
What Happened
The deal granted MedReleaf shareholders 3.575 common shares of Aurora for each MedReleaf share held. Aurora paid $2.5 billion for the acquisition, according to CNBC.
"The closing of this transaction brings together two vertically integrated, successful pioneers in the cannabis industry, creating a company with more than 1,200 employees and a rapidly growing domestic and international footprint,” Aurora CEO Terry Booth said in a statement.
"The combination of MedReleaf and Aurora creates a well-capitalized company positioned exceptionally well to generate further shareholder value, driven by the low-cost production of high-quality cannabis products.”
Both companies have developed extensive business expertise in plant genetics, furthering the research and production of different traits for an array of cannabis markets.
Why It’s Important
This summer, Canada legalized the use of recreational marijuana for adult consumers.
Cannabis companies like Aurora have sought ways to improve production to take advantage of the increased demand.
What’s Next
This transaction creates a strong industry leader with the combined funded capacity of more than 570,000 kg of cannabis for annual distribution, according to Aurora. The company has nine Canadian facilities and two in Europe and is adding MedReleaf's more than 400 employees and three facilities in Ontario.
Aurora said in the press release it believes production costs for the combined company will fall below $1 per gram.
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