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Aphria Announces Another Acquisition

The Leamington, Ontario company will acquire Germany’s CC Pharma, extending presence in European medical cannabis market.

Photo by Anastasia Dulgier on Unsplash

Aphria Inc. (TSX: APHA.TO) (NYSE: APHA.N) announced today it will acquire CC Pharma GmbH, a foremost German pharmaceutical product wholesaler. The comes just one day after it announced it closed on its Perennial Inc. acquisition.

Aphria will pay €24.5 million in cash to CC Pharma, with up to another €23.5 million milestone payments. The company expects the transaction will close in January 2019.

Vertical integration in Germany

The acquisition, which will bring Aphria 13,000 German pharmacies upon closing, will increase the company’s vertical integration in Germany. That country possesses a key market for Aphria’s international growth plans.

“This acquisition strengthens our foothold in Germany, one of the most highly sought-after medical cannabis markets in the world,” said Vic Neufeld, Aphria’s CEO.

“CC Pharma is cash-flow positive and has significant experience with regulatory requirements and international logistics.”

Accordingly, he believes CC Pharma will be a useful addition to Aphria’s presence in Germany. He further added the deal will provide “deeper access to the important pharmacist channel and advancing our ambitious global growth strategy.”

The deal adds to Aphria’s previously announced supply agreement with CC Pharma. That agreement entitles Aphria to export approximately 1,200 Kilograms of medical cannabis products to Germany.

CC Pharma is a pharmaceutical importer and distributor founded in 1999. Its German market annual revenues, moreover, are over €200 million.

CC Pharma medical cannabis division

Bootstrapping on Aphria’s cannabis industry expertise, the company intends to create a CC Pharma medical cannabis division. Indeed, the new division will use the German company’s existing production, repackaging and labeling facilities at CC Pharma’s Densborn headquarters.

“We are pleased to join forces with a premier global cannabis company, whose commitment to quality, safety and patient care closely aligns with our own,” said Dr. Manfred Ziegler, Managing Director of CC Pharma.

“This is an exciting opportunity to build on our established network and advance our participation in a rapidly growing, emerging industry.”

Aphria’s German expansion continues

The deal will reinforce Aphria’s expanding German presence. The company’s wholly-owned subsidiary Aphria Deutschland acquired a 25.1 percent stake in Berlin’s Schöneberg Hospital earlier this year. As a result, Aphria gained access to doctors and patients in pursuit of medical cannabinoid education.

Moreover, the company is developing one of the largest GMP-certified cannabis warehouses located in Bad Bramstedt, northern Germany. The storage capacity of that facility is 5,000 kilograms.

Further, in preparation for Germany’s own cultivation, Aphria will build a Research and Development growing facility in that country.

“We are focused on leading the way in the medical cannabis market in Germany,” Hendrik Knopp, Managing Director of Aphria Germany.

“By combining Aphria’s expertise with CC Pharma’s established local market presence, we are well positioned to continue on that journey.”

Written by Jason Bagg

Mr Bagg has over 20 years experience in financial services ranging from Capital Markets to Private Equity. Mr Bagg has helped clients build wealth, reduce taxes and plan for retirement. Drawing on his experience, Mr Bagg has spoken on different panels regarding investing and has written numerous due diligence reports and white papers in this area.

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