Shareholders will receive one unit in the new company for every 20 shares of Aurora Cannabis Inc. (TSX:ACB) that they currently own
SmallCapPower | June 21, 2018: Aurora Cannabis Inc. (TSX:ACB), the second-largest Canadian marijuana stock by market cap, announced on Wednesday that it will spin out and distribute shares and warrants of its subsidiary, Australis Capital Inc., to shareholders of the Company by way of a return of capital. Aurora Cannabis plans to place its U.S. assets into a new separate company that will focus on investing in the cannabis and real estate sector. Shareholders will receive one unit in the new company for every 20 shares of Aurora Cannabis that they currently own. Shareholders will also receive a warrant that allows them to buy more shares in the new company for $0.25 each, one year after the deal is finalized.
For Our Complete Coverage Of Canadian Marijuana Stocks Click Here
Watch: Cannex Capital Holdings (CSE:CNNX) CEO Says it Has Significant Revenue and it’s Profitable
The spin out will likely boost investor interest in Aurora Cannabis stock, at least up until the record date deadline to receive shares of Australis Capital.
Cannabis is legalized in 29 U.S. states but still illegal at the federal level, which is the main reason why Aurora Cannabis is eager to place its U.S. assets into a separate company, to make sure it is clearly on the right side of the law for any investors looking to buy into the company. As a result of this separation, Australis will now be poised to acquire cannabis assets within the U.S. to better position itself if, and when, the drug becomes fully legal in the U.S.
Aurora Cannabis CEO Terry Booth said, “The proposed distribution of Australis shares and warrants delivers an immediate return to Aurora shareholders, and creates the opportunity for holders to benefit financially as Australis executes on its investment strategy in the U.S.”
In related news, Wednesday saw the historic announcement by the Prime Minister Justin Trudeau that Canadians will be able to consume marijuana recreationally without criminal penalties beginning October 17, 2018. Canada will become the second country to fully legalize marijuana after Uruguay.
Shares of Aurora Cannabis climbed ~5% on Wednesday post the spin-off and legalization of recreational cannabis announcements. The Company currently trades at market capitalization of $5.6 billion with price-to-book multiple of 4.07x.
Disclosure: Neither the author nor his family own shares in the company mentioned above.
To read our full disclosure, please click on the button below:
