Aurora Cannabis (TSX: ACB.TO) (NYSE: ACB) announced this morning that the company will increase its investment in Choom Holdings Inc. (CSE: CHOO) (OTCQB: CHOOF). Furthermore, it secured the right to 40% ownership of Choom at $2.75 per common share, and Aurora will also get nearly 100 million warrants out of the deal, convertible at $2.75. Choom intends to use proceeds of the deal for working capital and operations.
Increasing brand visibility
The $20 million investment will help the budding Choom accelerate their retail expansion amid brand awareness woes in the sector. Aurora, for its part, may be looking to compete with Canopy Growth Corp.’s Tweed brand, the most highly visible brand in the Canadian adult-use market.
Choom is developing a network of adult-use cannabis retail stores in Canada. The stores will offer a curated stock of products from multiple licensed producers. The retailer’s focus will be on elevating the customer experiences. With 45 retail stores in Western Canada, it has 27 development permits and 18 building permits across strategic municipalities.
“Choom has developed a strong brand identity that radiates throughout its developing network of retail stores, which is well aligned with Aurora’s overall adult usage strategy,” said Terry Booth, CEO of Aurora.
Chris Bogart, President & CEO of Choom commented “through this strategic investment, Aurora further diversifies its retail strategy, with additional retail opportunities across Western Canada, and future potential opportunities in the Ontario market.”
Bogart continued “we are pleased to increase our stake in Choom and support them as they execute on introducing their unique retail brand to Canadian cannabis consumers.”
Commenting on the impact of the investment to the company, Bogart said “this is a transformational investment from Aurora, one of the world’s leading cannabis companies, that helps accelerate our growth and expand our retail footprint to be one of best positioned and largest retailers in the country.”
He specified, “Aurora’s continued confidence and investment allow Choom to provide high-quality cannabis to a broader market of consumers across the entire country and expedite our expansion and the rollout of store openings.”
Choom is an adult use cannabis company with plans for one of the largest recreational cannabis retail networks in Canada. The company says that Hawaii’s “Choom Gang”—a group of Hawaiians from Honolulu during the 1970’s who loved to smoke “Choom” – inspired their name. Let’s hope for Aurora and Choom investors that they can bring out the Choom in shoppers who enter their retail spaces.
Aurora is one of the world’s largest and leading cannabis companies, but it was not immune to the post-legalization pot-stock rout. Its shares tumbled in the two weeks post-Canadian legalization with a modest recovery in recent days.
In addition to cannabis, derivative and hemp production, Aurora designs and engineers production facilities, breeds cannabis and conducts genetics research. The company also produces home cultivation merchandise and engages in wholesale and retail distribution.
The company’s purpose-built facilities integrate technology across processes, with the aim of being a leader in automation and customization and a low-cost producer.
A flurry of M&A for Aurora
Through M&A activity, Aurora recently acquired 15 wholly owned subsidiaries including– MedReleaf, CanvasRX, Peloton Pharmaceutical, Aurora Deutschland , H2 Biopharma, CanniMed Therapeutics, Urban Cultivator, BC Northern Lights, Anandia Labs, Larssen Greenhouses, HotHouse Consulting, MED Colombia, Agropro, Borela, as well as soon to be subsidiary ICC Labs.
The company also has strategic partnerships with Radient Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN), Capcium Inc. (private), Micron Waste Technologies Inc. (CSE: MWM), Evio Beauty Group (private), CTT Pharmaceuticals (OTCC: CTTH), Wagner Dimas (private), and Alcanna Inc. (TSX: CLIQ).