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Saturday, November 28, 2020

Aurora Cannabis Inc (OTCMKTS:ACBFF) Continues to Aggressively Pursue CanniMed

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Aurora Cannabis Inc (OTCMKTS:ACBFF) has been one of our favorites, to an almost effusive degree. The company has been absolutely great at working its cash from operations toward strong investments. It keeps setting the company up for better and better things ahead, and investors keep discounting those better things. It’s a classic discounting feedback loop. The latest such example has been the company’s strong-handed pursuit of a CanniMed takeover.

We have covered this narrative in detail, and I don’t want to rehash too much here. But the process has been far from convivial, to say the least. The most recent step is the company’s move to start buying up CanniMed on the open market. To wit: The company just announced that it has purchased 450,000 common shares of CanniMed Therapeutics Inc.

Aurora Cannabis Inc (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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As noted in the release, “On November 24, 2017, Aurora formally commenced its Offer to purchase all of the issued and outstanding common shares of CanniMed for consideration consisting of common shares of Aurora. The Offer Document, including the takeover bid circular and related documents are available on SEDAR.”

The share purchases were apparently made in connection with this precise offer. The offer is an overt move to “purchase all of the common shares of CanniMed”. There can be no question about that. As we have seen, the company does not seem likely to take “no” for an answer.

As noted in the release, “Aurora announced its intention to purchase common shares of CanniMed in its Offer to Purchase and Takeover Bid Circular dated November 24, 2017, which is filed on SEDAR under CanniMed’s SEDAR profile.”

As we have previously covered, CanniMed actually implemented a shareholder rights plan in November that prevented Aurora from commencing purchases in a timely fashion—a classic “poison pill”. We don’t know for sure where the next step will take things, but Aurora management doesn’t seem likely to relent.

Currently trading at a market capitalization of $2835.1M, ACBFF has a significant war chest ($127.9M) of cash on the books, which is balanced by virtually no total current liabilities. ACBFF is pulling in trailing 12-month revenues of $23.2M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 168.6%. This is an exciting story, and we look forward to a follow-up chapter as events 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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