- One of the largest marijuana producers in Canada is entering the U.S. CBD market.
- Aurora Cannabis (NYSE:ACB) has agreed to acquire a popular CBD brand, Reliva, in an all-share transaction.
- The announcement was made on Wednesday and the deal is expected to close in June, pending regulatory and shareholder approval.
Aurora Cannabis, one of the biggest marijuana producers in Canada, is entering the U.S. CBD industry after reaching an agreement to acquire one of the most popular CBD brands in the country – Reliva. This leading seller product is found in over 20,000 retail locations across the U.S.
Aurora Cannabis announced this deal on Wednesday and is anticipating for it to close in June upon regulatory and shareholder approval.
The deal was reached as an all-share transaction, meaning that Reliva members will gain $40 million of Aurora Cannabis’ common stock. There is also the potential earn-out up to $45 million in additional shares and cash. These funds will be dispersed if Reliva achieves the proper financial targets over the next couple of years.
The earn-out’s purpose is to minimize risk for investors of Aurora while motivating Reliva’s management to ensure success for the combined companies.
“Together, Aurora and Reliva will partner to create an international cannabinoid leader that we believe can deliver robust revenue and profitable growth,” stated Michael Singer, Aurora’s interim CEO.
“We have taken the time necessary to carefully assess the company’s entry into the U.S. market and we firmly believe that the combination with Reliva will create significant long-term value, as Reliva provides us options to grow in hemp-derived CBD internationally.”
Aurora Cannabis watched its stock spike by 30% within hours of the news breaking.
Aurora Cannabis’ entry into the U.S. CBD market will definitely stiffen the competition significantly, but it will also generate a lot of extra revenue for the industry, which will ultimately result in its growth.
One can assume that Reliva will dominate the boards for the time being, but it poses the challenge for another company to bring forward one of the best CBD products. The market will definitely begin to reflect these big changes once the coronavirus pandemic is concluded and everyday life can resume as normal.