Pot stocks rally after Aurora takeover

TORONTO • Pot stocks continued charging higher Monday after Aurora Cannabis Inc. reached a deal to acquire South Americafocused ICC Labs Inc.

The $290-million deal is the latest in an acquisition spree that has seen Aurora buy at least 10 companies in the past two years. Aurora shares gained 1.7 per cent, while ICC added 3.9 per cent in Monday trading in Toronto.

“We feel a significant sense of urgency to rapidly establish a powerful global footprint,” Cam Battley, chief corporate officer at Aurora, said in a phone interview.

Vancouver-based ICC has more than 70 per cent of the market share in Uruguay, which was the first country in the world to legalize recreational cannabis. It also holds Colombian licenses to produce medical marijuana and has an agreement to export cannabidiol products to Mexico.

The company’s current and under-construction facilities will bring its production capacity to an estimated 450,000 kilograms per year.

“We see ICC as the jewel of the South American market,” Battley said.

“This is going to be our anchor in South America and we have very big plans for that continent.”

The purchase price of $1.95 per share represents a 34 per cent premium to ICC’s 20-day volume-weighted average trading price as of Aug. 22, the day before ICC said it was aware of a Spanish-language media report about a potential acquisition.

Aurora will issue approximately 36 million shares in connection with the transaction.

Shareholders representing approximately 29.4 per cent of ICC have agreed tender their shares to the offer.

Pot stocks have posted significant gains since mid-August, when Canopy

Growth Corp. announced a $5 billion investment from Constellation Brands Inc.

The BI Canada Cannabis Competitive Peers index has added 38 per cent since Aug. 14, including a 4.3 per cent intraday gain on Monday.