Understanding the Breakout in AURORA CANNABIS IN (OTCMKTS:ACBFF)

Understanding the Breakout in AURORA CANNABIS IN (OTCMKTS:ACBFF)


AURORA CANNABIS IN (OTCMKTS:ACBFF) continues to press higher amid a monster breakout. There are several catalysts, but one must look back at the landmark minority stake investment by Constellation Brands, Inc. (NYSE:STZ) in CANOPY GROWTH CORP (OTCMKTS:TWMJF) to really spot the impetus for the change in character for this stock. The day before that news, ACBFF was around $2.25/share and moving sideways. The next day, it was up 10% and at the origin of a 12-day sprint that has taken the stock parabolic.

We have seen new financing in terms that demonstrate a competition among large investors to get involved. But that process itself may as well have been spurred by the STZ stake in TWMJF. That one move spoke volumes about how large Canadian cannabis players stand up to a Wall Street due diligence process. This stock is the focus of rampant speculation right now because it may be the one name that actually looks better than Canopy on paper — though APHRIA INC (OTCMKTS:APHQF) may as well.

AURORA CANNABIS IN COM NPV (OTCMKTS:ACBFF) is a licensed producer of medical marijuana pursuant to the Marijuana for Medical Purposes Regulations and operates a 55,200 square foot expandable state-of-the-art production facility in Alberta, Canada.

ACBFF’s wholly-owned subsidiary, Australis Capital Inc., seeks to be an active participant in the U.S. Cannabis market. Aurora is trading on the Canadian Securities Exchange under the trading symbol “ACB”. The company is headquartered in Vancouver, Canada.

According to company’s materials, “Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s Access to Cannabis for Medical Purposes Regulations (“ACMPR”). The Company operates a 55,200 square foot, state-of-the-art production facility in Mountain View County, Alberta, is currently constructing a second 800,000 square foot production facility, known as “Aurora Sky”, at the Edmonton International Airport, and has acquired, and is undertaking completion of a third 40,000 square foot production facility in Pointe-Claire, Quebec, on Montreal’s West Island. In addition, the Company holds approximately 9.6% of the issued shares (12.9% on a fully-diluted basis) in leading extraction technology company Radient Technologies Inc., based in Edmonton, and is in the process of completing an investment in Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1%. Furthermore, Aurora is the cornerstone investor with a 19.9% stake in Cann Group Limited, the first Australian company licensed to conduct research on and cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale importer, exporter, and distributor of medical cannabis in the European Union (“EU”), based in Germany.”

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So, as noted above, big things are afoot at Aurora. But what comes next?

One next step we are already seeing foreshadowed by the company is a likely takeover of CanniMed Therapeutics Inc. (TSX: CMED). According to a press release out on Wednesday, ACBFF announced that it has “submitted a proposal (the “Proposal”) to acquire all of the issued and outstanding common shares of CanniMed Therapeutics Inc. (TSX: CMED) (“CanniMed”). The proposal was delivered to the Board of Directors of CanniMed on November 13, 2017 and Aurora is seeking to pursue a mutually agreed upon combination with CanniMed. CanniMed has not yet engaged in active discussions with Aurora, however, Aurora welcomes the opportunity to do so, such that CanniMed’s shareholders can benefit from the significant inherent value in the Proposal.  Aurora has requested that CanniMed’s Board respond to the Proposal prior to 5:00 pm (Vancouver time) on Friday November 17, 2017, failing which, Aurora intends to commence a formal takeover bid for CanniMed.”

“Aurora and CanniMed are a great fit, truly complementary, and I am convinced we can generate even greater value by combining the two companies and aligning our efforts strategically,” said Terry Booth, CEO. “Aurora has the management expertise, capital markets strength, distribution channels, brand power and growth prospects to successfully integrate CanniMed into Aurora – the fastest-growing cannabis company with the sector’s most exceptional execution track record.”

Earning a current market cap value of $1813.3M, ACBFF has a significant war chest ($159.8M) of cash on the books, which stands against virtually no total current liabilities. ACBFF is pulling in trailing 12-month revenues of $18.1M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 386.5%. We will update the story again soon as developments transpire. Sign-up for continuing coverage on shares of $ACBFF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $ACBFF, either long or short, and we have not been compensated for this article.

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