AURORA CANNABIS IN COM NPV (OTCMKTS:ACBFF) was trading where it is today ($1.70 per share) about two months ago, but the 60+ days in between the shares traded as high as $2.50. Moreover, this was not done on small volume, as 2.6 million shares traded hands, which tells me many holders are in from higher prices.
I would bet few investors bought shares in late March during the selloff and most holders have been long since 2016 or bought the recent rally. This is one of the larger cannabis companies in the Canadian sector at $506 million market cap and is widely held with 293 million shares out.
AURORA CANNABIS IN COM NPV (OTCMKTS:ACBFF) made its acquisition of Pedanios GmbH, a leading wholesale importer, exporter, and distributor of medical cannabis in the European Union known to investors. Pedanios, a federally licensed medical and narcotic wholesale and GMP inspected narcotic import company, holds all relevant licenses and permits, and has been successfully importing, exporting, and distributing cannabis for medical purposes since December 2015, into and within the EU.
“This is a transformational acquisition for Aurora, and a key step in our aggressive international expansion strategy,” said Neil Belot, ACBFF’s Chief Global Business Development Officer. “The transaction will ensure ongoing and increasing high quality product is available to fuel Pedanios’ rapid growth, while positioning Aurora and Pedanios to seize upon opportunities together in Germany and the EU’s emerging cannabis industry.”
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“Pedanios, with first mover success in the EU, has proven itself as one of the world’s most trusted and scalable importers, exporters, and distributors of wholesale medical cannabis. Patients, physicians, and pharmacies across the EU recognize the Pedanios brand as the trusted source for high quality GMP certified medical cannabis,” said Terry Booth, ACBFF’s CEO. “The Pedanios team share Aurora’s vision, our high standards, and our intentions to play a leading role in shaping the future of the global cannabis industry. In addition, because the average market prices are higher in Germany than in Canada, we expect German sales to positively impact our average sales price per gram.”
“Canada and Germany are among the world leaders in medical cannabis, and as trailblazers in our respective countries, Pedanios and Aurora are well positioned to continue to drive innovation, expand our distribution network, and capture significant global market share,” said Patrick Hoffmann, Pedanios’ Co-Founder and Executive Partner. “We look forward to the synergies that our combined companies will deliver to shareholders and stakeholders alike.”
Under the terms of the purchase agreement, dated May 18, 2017, Aurora will pay a consideration to holders of Class B securities of Pedanios approximately 3,421,756 common shares of Aurora, priced at $2.14 per share. In addition, a total consideration of approximately $13,565,000 in cash and common shares is payable to the holders of Class A common shares of Pedanios, which are held by the two founders/Managing Directors of Pedanios who will continue to run the company.
The cash portion for the two founders being $3,020,000 and the share portion being 4,895,026 common shares of Aurora, priced at $2.14 per share, of which 17% will become free trading 4 months after closing, with the balance becoming unrestricted in equal installments on a quarterly basis over 27 months, commencing in February 2018. Total shares of ACBFF being issued over 3 years represent less than 2% of total shares outstanding. Aurora’s cash balance as of May 15, 2017 was $165,000,000. Values herein have been calculated based on an exchange rate of 1.51 Canadian dollars to every 1 Euros.
Pedanios, over the last 90 days, has achieved cash flow positive operations, with gross revenues of approximately CAD$1.15 million and costs of approximately CA$1.00 million. Revenues for May, up to and including May 26, 2017, were approximately CAD$0.5 million, reflecting a 410% increase in the daily sales pace as compared to average for the 8 months prior to the introduction of the new law, and an increase over the April and March 2017 averages of 70% and 108%, respectively.
AURORA CANNABIS IN COM NPV (OTCMKTS:ACBFF)) is a licensed producer of medical cannabis pursuant to Health Canada’s Access to Cannabis for Medical Purposes Regulations. ACBFF operates a 55,200 square foot, state-of-the-art production facility in Mountain View County, Alberta, and is currently constructing a second 800,000 square foot production facility, known as “Aurora Sky”, at the Edmonton International Airport. In addition, ACBFF is undertaking completion of a third 40,000 square foot production facility in Pointe-Claire, Quebec, on Montreal’s West Island. Shares have range traded this year and have recently been testing the bottom of the range at $1.70. But, these shares are widely held and many shareholders are locked in for the next round of legalization in the cannabis sector. For continuing coverage on shares of ACBFF stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!