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Tuesday, January 19, 2021

Understanding the Long Game for Aurora Cannabis Inc (OTCMKTS:ACBFF)

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To get a sense of where the Aurora Cannabis Inc (OTCMKTS:ACBFF) story is really headed, one only needs to look at the company’s cash levels (at last count, around $230M in liquid assets) and then see the string of strategic investments and acquisitions the company has announced just over the past 3 months. It paints a pretty clear picture.

To further drive this point home, the company just announced that it has signed a binding term sheet with Anandia Laboratories Inc. (a company involved in cannabis testing, genetics, and R&D), whereby Aurora will acquire all of the issued and outstanding shares of Anandia, “valuing the Company at approximately $115 million, payable in units consisting of one common share of Aurora plus one half of a common-share purchase warrant for each common share of Aurora issued to Anandia.”

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. The Company operates a 55,200 square foot, state-of-the-art 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 a 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, based in Germany.”

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Dr. Jonathan Page, Anandia’s co-founder and CEO, stated, “Anandia has amassed an extensive library of cannabis genetics coupled with in-depth genomic and chemical analysis. Partnering with Aurora, with their expanded financial resources, scientific expertise and multiple cultivation sites, will enable us to accelerate our current breeding efforts to create the next-generation of cannabis genetics. Both Anandia and Aurora are strong believers in research and science-based solutions. We are confident that joining forces will enable us to rapidly advance cannabis science for the benefit of consumers, patients and growers, and further establish Aurora as the global leader in the cannabis industry.”

According to the release, Aurora will purchase 100% of the issued and outstanding shares from Anandia’s shareholders in exchange for common shares of Aurora based on the 20-day VWAP (to the Effective Date) equivalent to approximately $115 million. In addition, each Aurora share will be accompanied with a warrant exercisable for 1/2 of an Aurora common share at an exercise price equal to the issue price plus 10% with a term of 5 years.

Earning a current market cap value of $3.84B, ACBFF has a significant war chest ($231M) of cash on the books, which compares with about $2.6M in total current liabilities. One should also note that debt has been growing over recent quarters. ACBFF is pulling in trailing 12-month revenues of $42M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 211.1%. You can bet we will update this one again as new information comes into view. 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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