At 10:00 AM ET today, the CEOs of Aurora Cannabis and MedReleaf held a joint press conference to announce Aurora’s acquisition of MedReleaf for $3.2 billion dollars in the biggest deal yet for the Canadian cannabis industry, ending weeks of speculation from investors and denials from company representatives.
By joining forces, the combined firm would have a production capacity of 570,000 kg of cannabis per year through nine facilities in Canada and two in Denmark, according to the press release.
While the deal has been approved by the boards of both companies and the boards recommend that shareholders vote in favour of it, it still awaits shareholder approval. If the deal is approved, the newly combined company could have a market cap of almost $7 billion, which would make it bigger than Canopy Growth Corp., Canada’s biggest cannabis company for the time being.
This landmark deal follows Aurora’s $1.1 billion acquisition of CanniMed Therapeutics which was just completed in early May and was, until now, the biggest deal in the Canadian cannabis industry.
Now, some of the biggest LP brands in the country will be under one roof- Aurora, CanniMed, and MedReleaf.
The deal will enable Aurora to scale and lower costs, along with combining their distribution network and capabilities with MedReleaf’s.
Under the terms of the agreement, Aurora shareholders would own 69% with MedReleaf shareholders owning the remaining 31%.
“This is a transformational transaction that brings together two pioneering cannabis companies, both committed to high technology, high quality and low-cost production, to create a powerful platform for accelerated growth and success on a global scale,” said Terry Booth, CEO of Aurora.
MedReleaf CEO Neil Closner said, “By combining with Aurora, an integrated producer with an exceptionally strong track record for execution, and deep domestic and international distribution capabilities, we will be ideally positioned to set the global standard for our industry at a pace that will be difficult to match.”
Canaccord Genuity advised MedReleaf while BMO Capital Markets advised Aurora Cannabis, as BMO aggressively expands into the cannabis market. According to the Financial Post, today’s deal between Aurora and MedReleaf puts BMO Capital Markets in second place (behind Canaccord Genuity) for advising on Canadian pharmaceutical acquisitions, which includes medical cannabis.