Last night the Globe and Mail reported that a group of Investment Banks led by BMO Nesbitt Burns are struggling to sell their position in The Green Organic Dutchman (TSX: TGOD). In the report, sources tell the Globe roughly 40 percent of the deal is unsold.
On Tuesday, Aurora Cannabis (TSX: ACB) signed an agreement to sell their remaining shares in TGOD through a group of investment banks led by BMO Nesbitt Burns for an $86.5-million deal. The deal was priced at $3 a share, when the closing price earlier in the same day was $3.51.
BNN Bloomberg talked with Seaport Global Securities analyst Brett Hundley who told BNN “the sale allows Aurora to further pad its cash reserves as it continues its build out its cultivation and processing footprint.”
In a company news release, Aurora Cannabis CEO Terry Booth said “We evaluate our investment portfolio on a regular basis to make sure it continues to align with our investment strategy and corporate priorities. When we acquired Whistler Medical Marijuana Corporation – an iconic and premium organic cannabis producer – our interest in TGOD became less important to our core strategy.”
BMO structured this deal as a block trade, a format typically used when there is a great deal of demand for a security. The idea is that in these cases the investment bank can move the securities in a quick and painless transaction. According to the Globe sources, many institutional buyers aren’t interested in the former Aurora position, leaving the underwriters on the hook for the unsold stock.
TGOD closed the day up 1c to $2.94.
Information for this briefing was found via Sedar, BNN Bloomberg and the Globe and Mail. 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.
SmallCapSteve started blogging in the Winter of 2009. During that time, he was able to spot many take over candidates and pick a variety of stocks that generated returns in excess of 200%. Today he consults with microcap companies helping them with capital markets strategy and focuses on industries including cannabis, tech, and junior mining.