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Is Now The Time To Put Some Faith Back In Aurora Cannabis?

May 27, 2020 • 7:45 AM EDT
3 MIN READ  •  By Anthony Varrell
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The last few weeks have been eventful for Aurora Cannabis Inc. (ACB.TO) (ACB) and this is a trend that our readers should be aware of. After completing a reverse split, the Canadian cannabis producer came under heavy pressure and the shares touched new 52-week lows.

Shortly after the decline, Aurora Cannabis reported better-than-expect first quarter financial results and the shares surged higher. The rally was short lived, and the Canadian cannabis producer once again came under heavy pressure after jumping more than 100% higher in a two day period.

Last week, Aurora Cannabis jumped higher after announcing the acquisition of Reliva, a leader in the sale of hemp-derived CBD products in the United States. The transaction is expected to be immediately accretive to Aurora on an Adjusted EBITDA basis and we find this to be significant.

The transaction combines Aurora’s leading Canadian recreational brands, and Canadian and European medical market position with a leading US CBD brand. The deal represents the culmination of a multi-month strategic evaluation of the US hemp-derived CBD industry and the market seems to be excited about the acquisition.

According to Aurora, Reliva stood out among a lengthy list of potential partners for its:

  1. Focus on regulatory, testing and compliance protocols
  2. Proven management team with extensive experience selling and marketing regulated consumer packaged goods
  3. Deep relationships with critical trade partners that provide a U.S. national distribution footprint
  4. Financial discipline and track record of growth and profitability.

Going Global: Positioned to be a Leading CBD Brand

The combined company is expected to be positioned as a leading player in the world’s largest cannabinoid market and we are bullish on the amount of value that can be created between the businesses. The transaction will create a large and diversified pure-play international cannabinoid company and we are favorable on what each company brings to the partnership.

Not only is the deal expected to be immediately accretive to Aurora shareholders but it also will add a talented management team, with strong international consumer packaged goods backgrounds and a proven track record of growth, to the core Aurora team

According to the Brightfield Group, the global CBD market is expected to be as large as US$24 billion by 2025. We believe that the combined company is better positioned to capitalize on the CBD market and will monitor how the teams are able to integrate.

Another reason we are excited about the acquisition is because it combines Aurora’s scientific and product innovation expertise with Reliva’s nation-wide distribution footprint and speed to market experience. The combined company will leverage Aurora’s existing scientific expertise to further advance cannabinoid product innovation and we are favorable on the growth prospects that are associated with this.

A Global Growth Story to be Aware of

Aurora Cannabis is one of the best known cannabis companies and is an opportunity that we have been following for several years. The last twelve months have been challenging for the Canadian cannabis producer and we believe that the business could be reaching an inflection point.

If you are interested in learning more about the leading Canadian cannabis producer, please send an email to support@technical420.com to be added to our distribution list and learn more.

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Authored By

Anthony Varrell

Anthony Varrell is Managing Director of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

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