Aurora and Whistler Sign Letter of Intent
Aurora Cannabis Inc. (TSX: ACB) (NYSE: ACB) shares enjoyed a nearly 6% pop in price in today’s trading after the company announced the completion of a letter of intent with Whistler Medical Marijuana Corporation. The Edmonton-based cannabis company will acquire all the issued and outstanding shares of Whistler in an all stock deal.
All-Share, $175M Transaction
Taking milestone payments into account, the all-share transaction will total roughly $175 million in exchange for Whistler’s privately-held shares.
Once closed, Aurora will gain a host of premium, differentiated and organic-certified products for both medical and adult-use markets. Moreover, adding Whistler will strengthen Aurora’s position in the west coast marijuana market.
The private company is located in Whistler, British Columbia. Following the company’s success with award-winning certified BC bud, Aurora shareholders hope to profit from the successful brand.
What is Aurora Getting?
Whistler has a substantial following among patients and recreational consumers for their premium cannabis products. Beyond that, however, what is Aurora getting for their $175 million?
Whistler, British Columbia welcomes over 2.7 million visitors each year, consistently ensuring it’s a top tourist spot globally. Whistler’s brand bootstraps from that status, and thus resonates strongly across both Canadian and international markets.
First mover advantage
After its founding in 2013, Whistler became one of Canada’s original ten licensed producers. Moreover, it was the first licensed producer to achieve organic certification and sell certified-organic cannabis products.
Furthermore, the Fraser Valley Organic Producers Association (FVOPA) certifies Whistler’s products. Whistler built their second facility in compliance with EU GMP standards. That advantage will enable Aurora to supply certified organic marijuana products to the burgeoning European market.
Whistler has a large-scale cold-water extraction technology different from any other producer, which produces a host of organic-certified products.
Whistler runs two indoor licensed cannabis production facilities. The first is located in Whistler, British Columbia. The second is a new purpose-built, state-of-the-art facility in the same area. They anticipate the latter will reach full-capacity in Summer 2019 and will bring combined production capacity more than 5,000 kg annually.
Expanded international footprint
Whistler serves global markets that will expand Aurora’s footprint. Selling in both Australia and the Cayman Islands already, Aurora plans to use its extensive experience in developing EU GMP certified operations to grow Whistler’s international export opportunities.
Since 2015, Whistler has posted positive cash flows. The market seems to accept higher pricing from Whistler in exchange for consistently high quality, organic product. Indeed, its selling prices are up to 50% higher than rates in the average Canadian medical market.
Whistler offers over 30 flower varieties and oils, from a 150 strain genetic bank.
What does Aurora’s Management Say?
“This transaction adds an iconic, organic certified BC-based brand with exceptional traction and a significant price premium in both the medical and retail markets.” Terry Booth, CEO of Aurora
“We intend to accelerate the completion of Whistler’s Pemberton expansion project and leverage our domestic and international distribution channels to increase market reach for their exceptional products. Whistler has established leadership in the organic cannabis market, and we look forward to welcoming Christopher and his team to the Aurora family.” Christopher Pelz, CEO, and Founder of Whistler.
Pelz added, “With its commitment to the highest product quality standards, as well as its large footprint in both the Canadian and international cannabis markets, Aurora is the ideal partner for Whistler to enhance our growth and margin profile. We feel there is a strong cultural fit, and believe that Aurora is the right home for us to maintain our organic craft cultivation identity while being able to leverage the resources and capabilities of a large and rapidly growing global company.”
Neil Belot, Aurora’s Chief Global Business Development Officer also said, “Whistler, the longest operating certified organic cannabis producer in Canada, has an exceptional track record built on the consistent delivery of premium user experiences. This has resulted in strongly-rated products that command among the highest prices in the Canadian adult consumer use industry, targeting the premium organic craft segment in both the consumer and medical markets. Furthermore, as the only cannabis producer in the world-renowned resort town of Whistler, British Columbia, the company has developed broad brand appeal, both across Canada and internationally.”
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