Cana­dian pot go­ing global

The Prince George Citizen - - Money - Kris­tine OWRAM, Jen SKERRITT Bloomberg

An­other day, an­other near-bil­lion-dol­lar deal in Canada’s mar­i­juana in­dus­try.

Aphria Inc. agreed to buy Nu­u­vera Inc., a global cannabis com­pany based in Bramp­ton, On­tario, for about C$826 mil­lion (US $670 mil­lion) in cash and stock.

The of­fer of about C$8.50 a share is 21 per­cent higher than Nu­u­vera’s clos­ing price on Fri­day.

The deal is part of a grow­ing wave of con­sol­i­da­tion in Canada’s mar­i­juana in­dus­try as com­pa­nies seek to gain mar­ket share be­fore sales be­come le­gal at some point this year. While the com­bined Cana­dian mar­ket for med­i­cal and recre­ational mar­ket is ex­pected to reach about C$8 bil­lion in sales by 2021, com­pa­nies such as Aphria and Nu­u­vera are look­ing to grow in mar­kets where there’s even big­ger po­ten­tial.

“This po­si­tions us to grow in­ter­na­tion­ally and re­aligns the po­ten­tial of these emerg­ing cannabis mar­kets,” Aphria Chief Ex­ec­u­tive Of­fi­cer Vic Neufeld said Mon­day on a con­fer­ence call.

Nu­u­vera is work­ing with part­ners in Ger­many, Is­rael and Italy and is ex­plor­ing op­por­tu­ni­ties in other coun­tries to de­velop com­mer­cial pro­duc­tion and distri­bu­tion of med­i­cal cannabis. Com­bined with Aphria’s agree­ments in Aus­tralia, the merged en­tity will have a “lead­ing in­ter­na­tional foot­print among Cana­dian li­censed pro­duc­ers,” the com­pa­nies said Mon­day.

Nu­u­vera is one of the fi­nal­ists in a ten­der to sup­ply Ger­many’s mar­ket and the com­pany al­ready has an agree­ment to ex­port mar­i­juana to a Ger­man phar­ma­ceu­ti­cal dis­trib­u­tor, CEO Lorne Abony said on the call. Italy’s med­i­cal cannabis mar­ket is ex­pected to be worth more than $9 bil­lion and Nu­u­vera is cur­rently one of only seven pro­duc­ers that have se­cured a li­cense to im­port into the coun­try, he said.

“I would hope to show you that in one year we have 20 coun­tries un­der li­cense,” Neufeld said. “That is the vi­sion. This is a very pow­er­ful en­tity that we just cre­ated.”

Nu­u­vera share­hold­ers will re­ceive C$1 in cash plus 0.3546 of an Aphria share, which comes to C$8.50 per share based on Aphria’s 10-day vol­ume-weighted av­er­age price of C$21.15. Aphria plans to is­sue up to 34 mil­lion shares to fund the trans­ac­tion, which is ex­pected to add to earn­ings per share in the first full fis­cal year af­ter it closes.

The trans­ac­tion comes less than a week af­ter Aurora Cannabis Inc. agreed to ac­quire Can­niMed Ther­a­peu­tics Inc. in a C$1.23 bil­lion deal that would be the largest yet in the na­tion’s red-hot in­dus­try.

Aphria fell as much as 6.2 per­cent and was down 3.9 per­cent to C$19.37 at 11:52 a.m. in Toronto. The Leam­ing­ton, On­tario-based com­pany has a mar­ket value of C$3.1 bil­lion, the third-largest pot pro­ducer in Canada by that mea­sure.

Nu­u­vera surged as much as 21 per­cent to C$8.44, a record in­tra­day price. Nu­u­vera just started trad­ing on Jan. 9 in Toronto, fol­low­ing a re­verse takeover last year to gain a list­ing on the TSX Ven­ture Ex­change.

The deal is sub­ject to the ap­proval of two-thirds of Nu­u­vera share­hold­ers. Aphria has se­cured the votes of hold­ers of about 57 per­cent of out­stand­ing Nu­u­vera shares, in­clud­ing its ex­ist­ing 6.5 per­cent stake in the com­pany.

Stoic Ad­vi­sory acted as fi­nan­cial ad­viser to Aphria and Stike­man El­liott pro­vided le­gal ad­vice. Canac­cord Ge­nu­ity Corp. and law firm Nor­ton Rose Ful­bright Canada ad­vised Nu­u­vera.


An Aphria worker looks out over a crop of mar­i­juana in an un­dated handout im­age.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.