The cannabis market seems to be on the verge of an explosion – with the majority of companies expediting their expansion programs – and the sector is witnessing a surge in merger activities. The removal of regulatory restrictions on weed in Canada and its increasing acceptance in other parts of the world has spurred a competition among the companies to ramp up their resources.
Aurora Cannabis (ACB), one of the 10 licensed manufacturers of marijuana-based recreational products in Canada, has been on a takeover spree for some time. The Edmonton-based company on Monday signed the second buyout deal in less than two months.
In an effort to tap the weed market in western Canada more effectively, the company is adding Whistler Medical Marijuana into its fold, a privately held firm based in British Columbia. The all-stock deal is worth $175 million, which includes milestone payments to be made when Whistler meets certain performance goals.
Apart from being a popular cannabis producer, Whistler is the first brand to get organic certification in Canada. While obtaining access to the new market, Aurora will also benefit from Whistler’s unique and premium products which the company intends to introduce in its existing markets globally.
The all-stock deal is worth $175 million, which includes milestone payments to be made when Whistler meets certain performance goals
“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,” said Aurora CEO Terry Booth.
Last month, Aurora entered the lucrative Mexico market by purchasing Farmacias Magistrales, the only licensed company in Mexico to import products that contain tetrahydrocannabinol, the substance that gives marijuana its psychoactive properties.
In the most recent quarter, Aurora’s revenues more than tripled annually, supported by a four-fold increase in production. The company is apparently taking forward its expansion program encouraged by the exceptional sales and earnings growth in the last quarter.
It is expected that the American weed industry will get yet another boost when more US states that favor legalization opens their doors to medical marijuana. As a result, more deals will take place and the smaller players will dissolve into their mightier counterparts.
Aurora’s shares gained about 3% in the New York Stock Exchange on Monday. After losing more than 40% in the past twelve months, the stock has been on an uptrend since the beginning of the year.