Aurora Cannabis Makes a Great Brand Buy

In this market news, Aurora Cannabis Inc. (TSX:ACB), one of the Canadian marijuana stocks, said it is set to acquire Whistler Medical Marijuana Corporation

SmallCapPower | January 18, 2019: Aurora Cannabis Inc. (TSX:ACB), one of the Canadian cannabis stocks, Monday announced that it has signed a Letter of Intent (LOI) to acquire Whistler Medical Marijuana Corporation, in an all-stock transaction valued at ~ $175 million, which includes certain milestone payments. Through this acquisition, Aurora Cannabis will obtain a premium and differentiated organic-certified product suite, which will expand its medical and adult-use offerings and reinforce its presence in the well-established West Coast cannabis market.

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Founded in 2013, Whistler Medical Marijuana is one of Canada’s original 10 licensed producers and was the first licensed producer to obtain organic certification and sell a full suite of organic-certified cannabis products. Whistler Medical Marijuana has developed one of Canada’s most iconic cannabis brands, built on quality, award-winning organic-certified BC bud.

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Whistler Medical Marijuana operates two indoor licensed production facilities in British Columbia, which are anticipated to have a production capacity of over 5,000 kg per year by Summer 2019. Whistler has international distribution networks in both Australia and the Cayman Islands and through the addition of Aurora’s deep experience in completing EU GMP certified facilities and its large global distribution network, Aurora Cannabis could pursue additional international export opportunities.

Aurora Cannabis CEO Terry Booth said, “This transaction adds an iconic, organic-certified BC-based brand with exceptional traction and a significant price premium in both the medical and retail markets. We intend to accelerate the completion of Whistler’s Pemberton expansion project and leverage our domestic and international distribution channels to increase market reach for their exceptional products. Whistler has established leadership in the organic cannabis market, and we look forward to welcoming Christopher and his team to the Aurora family.”

Whistler Medical Marijuana is cash-flow positive and has been so since 2015, with EBITDA margins in excess of 30% and average selling prices in excess of 50%, which is higher than the average Canadian medical market and premiums at par for the adult-use market. Whistler’s production facilities are certified by the Fraser Valley Organic Producers Association (FVOPA) and comply with International Organic Growing Standards and EU GMP standards. Whistler Medical Marijuana has more than 30 flower varieties and strain-specific oil products, from an extensive genetics bank of over 150 strains, establishing a strong presence in Western Canada.

The closing of the transaction is subject to customary closing conditions, approval from Whistler shareholders and regulatory approvals. Aurora Cannabis stock trades at a market capitalization of C$9.1 billion with a price-to-book multiple of 2.0x.

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

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