In this market news, Aphria Inc. (TSX:APHA) (NYSE:APHA), one of the Canadian marijuana stocks, announced its intention to buy Germany’s CC Pharma GmbH
SmallCapPower | November 9, 2018: Aphria Inc. (TSX:APHA) (NYSE:APHA), one of the Canadian cannabis stocks, Thursday announced that it is poised to acquire CC Pharma GmbH, a distributor of pharmaceutical products to more than 13,000 pharmacies in Germany. The transaction is expected close in January 2019.
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Aphria will pay €24.5 million in cash to CC Pharma at closing, with an earn-out multiple on future EBITDA of up to another €23.5 million following closing, if certain performance milestones are met. CC Pharma, operating since 1999, generates more than €200 million in annual revenue and is cash-flow positive, according to Aphria CEO Vic Neufeld.
The acquisition of CC Pharma GmbH is expected to strengthen Aphria Inc’s end-to-end medical cannabis operations and infrastructure in Germany. Aphria, through its wholly-owned subsidiary Aphria Deutschland, recently acquired a 25.1% interest in Berlin-based Schöneberg Hospital, providing access to both doctors and patients to support education about the benefits of medical cannabinoids. It was also considered the first step in Aphria’s plans to build and operate pain treatment centres throughout Germany.
Aphria also announced on Wednesday that it has closed a deal with Perennial Inc., a subsidiary of DATA Communications Management Corp. (TSX:DCM), for establishing joint venture (JV) aimed at creating original, consumer-driven brands and products for the adult-use cannabis market.
The JV will rely on Aphria’s expertise as a major cannabis producer and Perennial’s know-how of global brand development and strategy to introduce new, cannabis-infused products to the Canadian and legal international markets. Perennial has successfully created go-to-market strategies for major CPG and retail clients in North America and beyond.
Aphria President Jakob Ripshtein remarked, “With this partnership, Aphria is advancing its industry-defining approach to developing the cannabis-based products of tomorrow. The long-term future of this industry will be driven by consumer-centric R&D, innovation-led product and brand development and the ability to execute. Aphria is setting this standard today, and we will continue to pursue the most strategic opportunities and partnerships to bring consumer-focused innovations that define the future of this global industry.”
The JV’s focus will not just be edibles and beverages but a wide range of products in order to cater to consumer demand in the marijuana and wellness space.
With a presence in more than 10 countries across five continents, Aphria is focused on low-cost production of safe, clean and pure pharmaceutical-grade cannabis. Aphria stock currently trades at a market capitalization of C$4.2 billion on the TSX with a price-to-book multiple of 2.74x and forward price-to-earnings multiple of 29.71x.
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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