Aurora Cannabis Stock Has Momentum on its Side

Aurora Cannabis Inc. (TSX:ACB), one of the Canadian marijuana stocks, said it has added a high-profile appointment in Nelson Peltz

SmallCapPower | March 18, 2019: Aurora Cannabis Inc. (TSX:ACB) (NYSE:ACB), one of the Canadian cannabis stocks, Wednesday announced that it has appointed Nelson Peltz as a Strategic Advisor, to help the Company in global expansions, and to enter into new and probable market segments by way of potential partnerships.

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Nelson Peltz, an American billionaire businessman and investor, has an extensive experience in public & private organizations where he led many turnarounds. Nelson Peltz is the Chief Executive Officer and a Founding Partner of Trian Fund Management, a multi-billion dollar investment management firm.  Additionally, he serves as the non-executive Chairman of The Wendy’s Company and Director of The Procter & Gamble Company, Sysco Corporation, and The Madison Square Garden Company. Previously, Mr. Peltz has worked with H. J. Heinz Company, Legg Mason, Ingersoll-Rand, and Mondelēz International as a Director. He also served as the Chairman and Chief Executive Officer for Triarc Companies, and Triangle Industries. Mr. Peltz started his career with his family’s food distribution business.

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“We believe he could be instrumental in facilitating discussions with large (consumer packaged goods) companies,” GMP Securities analyst Martin Landry said in a recent research note.

Mr. Peltz said, “I believe Aurora has a solid execution track record, is strongly differentiated from its peers, has achieved integration throughout the value chain and is poised to go to the next level across a range of industry verticals. I also believe that Canadian licensed producers and Aurora in particular, are well positioned to lead in the development of the international cannabis industry as regulations evolve, with a strong, globally replicable operating model. I look forward to working with Terry and the extended Aurora team to evaluate its many operational and strategic opportunities, including potential engagement with mature players in consumer and other market segments.”

Mr. Peltz will provide his advisory services to Aurora Cannabis through 280 Park ACI Holdings. For these services, Aurora has granted him stock options to buy ~20 million common shares at a price of C$10.34 per share. The options will ratably vest over a four-year period on a quarterly basis, subject to accelerated vesting if specified events occur, which include the consummation of certain transactions, and the closing price of Aurora’s common shares being at least C$31.02 and additionally C$41.36 for a specified number of trading days. Mr. Peltz is granted with registration rights relating to the common shares to be acquired through the exercise of the options.

Earlier this month, Cowen initiated coverage of Aurora Cannabis, calling the Company its top cannabis pick.

“The Company’s large cultivation footprint, capable of producing over 575,000 kilograms, provides ACB with the necessary infrastructure to weather early storms in adult use while continuing to grow higher-value revenues in the medical market,” its analyst wrote in a research note, adding that they believe that Aurora Cannabis will generate positive EBITDA by Q4 2019, which would be among the first LPs to reach that milestone, ahead of Canopy Growth Corporation (TSX:WEED) and Aphria Inc. (TSX:APHA).

Post the announcement, shares of Aurora Cannabis surged ~13% to close at C$12.02. Aurora Cannabis stock currently trades at a market capitalization of C$12.0 billion with a price-to-book multiple of 2.8x.

Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.

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