Aurora Cannabis Inc. (TSX:ACB) set to acquire privately-held Anandia Laboratories in all-stock deal worth $115 million
SmallCapPower | June 14, 2018: Aurora Cannabis Inc. (TSX:ACB) Tuesday announced that it has signed a binding term sheet with Anandia Laboratories Inc. through which Aurora intends to acquire all the issued and outstanding common shares of privately-held Anandia in an all-stock deal. The transaction is valued at about $115 million on a fully-diluted basis. Anandia’s shareholders will get common shares of Aurora based on the 20-day VWAP (to the effective date). Additionally, each Aurora Cannabis share will come with a warrant exercisable for one-half of an Aurora share at an exercise price equivalent to the issue price plus 10% with a five-year term.
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Both the companies intend to complete the transaction through a plan of arrangement under the Business Corporations Act (British Columbia). The closing of the transaction is subjected to mandatory closing conditions, due diligence and approval from shareholders.
Aurora Cannabis CEO Terry Booth remarked, “This is a transformative acquisition that expands our science capabilities in the upstream segment of the seed-to-sale cannabis value chain, significantly boosting plant-based innovations in cultivation, enabling accelerated product development, and, ultimately, enhancing our margin profile going forward. Anandia has a fantastic, complementary corporate culture and some of the best and brightest minds in the cannabis industry, including Dr. Jonathan Page, the first scientist to sequence the cannabis genome. By adding Dr. Page and the Anandia team to the existing Aurora and CanniMed research infrastructure, we are assembling a unique, world-class research group to capitalize on the many exciting opportunities the cannabis plant offers society.”
Anandia Laboratories pursues a three-pronged approach for value creation for its clients, which are licensed under Canada’s Access to Cannabis for Medical Purposes Regulations (ACMPR) and plans to continue to do so post the deal completion:
- Independent Third-Party Analytical Testing (including cannabinoids, terpenes and contaminants such as microorganisms, pesticides, heavy metals and others)
- Genetics (including plant breeding, tissue culture and strain archiving, as well as genomics-based technologies)
- Product Development (including cannabinoid preparations and formulations)
Through Aurora Cannabis, Anandia Laboratories has an opportunity to access new markets in Canada and worldwide through Aurora’s global presence. Furthermore, the association with Aurora will accelerate the construction of Anandia’s testing and product development laboratory in Vancouver, and a purpose-built cannabis breeding facility ahead of Canadian adult-use recreational legalization.
Aurora Cannabis currently trades at market capitalization of approximately $5.0 billion with a price-to-book multiple of 3.61x.
Disclosure: Neither the author nor his family own shares in the company mentioned above.
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