Canada’s Aurora Cannabis Inc (OTCMKTS: ACBFF) To Buy Rival MedReleaf In All-Stock Merger
Canada is one of the many countries that are preparing for the legalization of cannabis for recreational use. On the other hand, the adoption of legalization comes a time when the industry is facing a wave of mergers. One such upcoming merger, which is also being referred to as the biggest deal of its kind, will be between and Aurora Cannabis Inc (OTCMKTS: ACBFF) and MedReleaf. Records have it that the deal will cost Aurora close to C$3.2 billion ($2.51 billion).
The acquisition of MedReleaf is Aurora’s second large deal this year and it is expected to amplify the market. Nonetheless, as consolidation of the marijuana industry heats up, the players are looking at it from the approach of cutting costs and gaining scale.
Canadian marijuana growers are racing to gain market share
The merging of the two entities is not a surprise given that every marijuana grower and industry player is seeking to influence the market. According to Aurora’s Chief Corporate Officer, Cam Battley, and everyone’s aim is to tap into any growth opportunity which comes forth.
On the other hand, weed companies are also making a steady attempt at capitalizing on the investor’s enthusiasm. The move has so much support from various governments, which are in hot pursuit of advertising their ambitions of growing and distributing cannabis.
Apparently, Terry Booth, Aurora’s Chief Executive Officer claims that there are other upcoming mergers. Speaking to reporters in Toronto, Booth stated, “We’re not done. Over the next couple weeks you’ll see some more activity from Aurora,” but nothing on the scale of the MedReleaf deal.”
Many Canadian growers eke out little or no profit
The new wave of business mergers is expected to undo the current situation whereby Canadian growers are making little or no profit. A majority of them including Aurora has been making losses on revenue. Thus the combination of strengths through mergers will play a significant role in expanding the global medical cannabis market.
Meanwhile, expectations are high for the duo as it expects to make over above 570,000 kilograms per year of cannabis from their nine facilities spread out in Canada and Denmark.