In its latest “cost-cutting” move, Aurora Cannabis (TSX: ACB) (NYSE: ACB) announced after today’s closing bell that it will be acquiring US based hemp operator Reliva, LLC. The transaction is to take the form of an all-share payout, with Aurora paying US$40 million for the firm.
Details on the transaction were slim, aside from knowing what price is ultimately being paid in the form of shares. It’s unclear what price per share that the associated shares will be issued at, and therefore, its unclear what dilution is expected from the transaction following Aurora’s recent share rollback. What is known, is that earn-out terms have been included in the transaction, with up to $45 million in additional payouts, either in the form of cash or common shares, to be made over the next two years based on financial targets.
Reliva, as per Aurora Cannabis, is a leader in hemp-derived CBD product sales within the US, and reportedly ranks #1 in topical and #2 in overall market share within the US. It’s been stated that the company has products in over 20,000 retail locations, and has contracts with 8 of the 20 leading national retailers. Further, the company is stated to have posted positive EBITDA over the last twelve months, although no hard figures were provided, while being debt free and requiring no further capital expenditures or working capital.
Revenues or sales figures were not provided for Reliva.
Furthermore, Reliva’s CEO, Miguel Martin, is expected to stay with the firm and take the role of President of Aurora USA. Martin has over 25 years within the CPG industry, with previous roles including that of senior VP and General Manager of Altria Sales and Distribution.
The transaction is anticipated to close in June 2020.
Aurora Cannabis last traded at $12.75 on the NYSE. At current price levels, that would peg dilution for the announced transaction at approximately 3.14 million shares.
Information for this briefing was found via Sedar and Aurora Cannabis. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
