While consolidation is occurring south of the Canadian border in the US cannabis space, it also continues up here in the Great White North as well. Aurora Cannabis (TSX: ACB) last night revealed that it will be acquiring TerraFarma, the parent company of Thrive Cannabis.
While not nearly the size of the blockbuster $2.0 billion Cresco Labs (CSE: CL) and Columbia Care (NEO: CCHW) transaction announced this morning, the sale represents the continued consolidation within the Canadian cannabis landscape nonetheless. It also follows the announcement yesterday that Medipharm Labs (TSXV: LABS) will be acquiring the IP of Shelter Cannabis, a month after that shop was forced to close down due to financial strain.
The purchase of Thrive is currently set to occur via a combination of cash and shares totaling $38 million, which includes two potential earnout amounts of $10 million and $20 million that are to be paid based on the performance of the asset over the next two years.
Despite the small figure paid, the Thrive team is expected to take control of Aurora’s entire recreational cannabis operation, which has been struggling as of late. The company expects to shift to premium products, which is to include flower, pre-rolls, vape products and concentrates.
Financial details of Thrive were not provided, aside from the indication that the deal will provide “immediate positive Adjusted EBITDA to Aurora,” leading to the company posting positive Adjusted EBITDA within the first half of 2023, as per the company.
The transaction is currently expected to close in Aurora’s fiscal fourth quarter.
Aurora Cannabis last traded at $4.63 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization unless otherwise mentioned. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.