Aurora Cannabis Acquires Remaining Interest in Hempco (NYSE: ACB)

Cannabis cultivator Aurora Cannabis Inc (NYSE: ACB) announced Tuesday an agreement to strengthen its position as a vertically integrated cannabis company.

What happened

Aurora has signed a binding agreement with Hemp and Fiber Food Inc.or Hempco, to acquire all outstanding shares of the latter that it does not already own for C $ 1.04 per Hempco share in shares. The transaction value per share represents a value of C $ 63.4 million (approximately US $ 47.5 million) on a fully diluted basis.

Why is it important

Hempco supplies quality hemp products, hemp fiber neutraceuticals and hemp, and markets brands such as Planet Hemp and Praise. It also provides food and nutritional supplements for humans and animals. With these combined assets, Aurora is well positioned to generate growth through the sale of hemp products in more than 100 countries around the world.

Aurora initially invested in Hempco in 2017 and currently holds 52% of the outstanding shares of Hempco.

Hempco provides Aurora access to hemp at low cost and high volume for CBD extraction.

"Hempco's full integration into this infrastructure adds capacity, brands, and distribution channels to take advantage of the CBD's wellness opportunity, which is expected to reach $ 22 billion." 39, here 2022, "said Aurora in a press release.

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What then

Upon completion of the transaction, Hempco will become a wholly-owned subsidiary of Aurora and its shares will be delisted from the TSX Venture Exchange.

The transaction is expected to be finalized in the second quarter of 2019, a definitive agreement is expected to be signed by May 15th.

Aurora has traded up 3.4% to $ 8.80 a share on Tuesday morning.

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