Shares of Aurora Cannabis Inc. (TSE:ACB) continue to reach new heights following two announced acquisitions and a hostile offer for CanniMed Therapeutics Inc. (TSE:CMED)
SmallCapPower | November 24, 2017: Aurora Cannabis Inc. (TSX:ACB) shares continued to hit new highs on Friday, up 7% to $7.19 in early trading. The Company announced two acquisitions on Thursday and on Friday said it will go ‘hostile’ in its takeover offer for CanniMed Therapeutics Inc. (TSX:CMED). Aurora Cannabis stock price has currently increased about 12% during the past two trading sessions.
The first deal announced on Thursday was the acquisition of greenhouse design firm Larssen. Financial terms of the deal were not disclosed, but the offer includes performance-based milestone payments related to profitability metrics.
Larssen is a Canadian company that has set the industry standard in high-tech, automated, environmentally controlled greenhouses for over 30 years. Best known for the successful implementation of cutting-edge automation features and proprietary design characteristics that generate exceptional yields, Larssen has been involved with over 1,000 projects throughout the globe. For the 12-month period ending September 2018, Larssen is expected to generate ~$6 million in revenues, with an EBITDA margin exceeding 40%.
Upon completion of the transaction, Larssen will be integrated into a newly-incorporated subsidiary, Aurora Larssen Projects Ltd. (ALPS), which will be focused on providing a unique turn-key service offering to Aurora and its domestic and international partners. Larssen will design, engineer, and oversee construction of Aurora Sky facility, which upon completion is expected to be the largest capacity and most technologically advanced cannabis facility with ultra-low cost and premium-quality cannabis. Larssen is currently involved with over 15 cannabis industry clients globally, including five Canadian licensed producers. Any Canadian project deemed not to be in the best interest of Aurora shareholders will be notified that ALPS will no longer participate in such project.
The acquisition of Larssen is accretive, high-margin revenue generating opportunity that will also extend Aurora’s technological leadership in the cannabis sector. Growth of ALPS will be driven by the continued rapid evolution of the cannabis industry in Canada and around the globe. This acquisition is part of Aurora’s aggressive expansion strategy, which is likely to include further construction projects. Through Larssen, the Company has secured direct access to the services of the world’s pre-eminent turn-key project team in the cannabis sector, enabling management to focus on growing Aurora Cannabis.
The second acquisition announced on Thursday was that of H2 Biopharma Inc, a late-stage ACMPR applicant based in Lachute, Quebec. H2 is currently completing a 48,000-square foot cannabis production facility, which is projected to produce approximately 4,500 kilograms of cannabis per annum. The latest Aurora Cannabis acquisition will be the Company’s fourth production facility in Canada, and the second site in Quebec.
Aurora Cannabis stock currently trades at a high Sales to Price ratio of 140x.
Disclosure: Neither the author nor any of the principals at SmallCapPower, or their family members, own shares in the company mentioned above.
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