Mergers and acquisitions (M&A) are very common in the business world, including in the marijuana sector. They are transactions involving the ownership of companies or organizations that enable them to cope with difficult times or to continue to grow and change their competitive position. Aurora Cannabis made it clear that it is sure to have a very active 2023 with respect to M&A, especially after reporting an upbeat second quarter.
According to Miguel Martin, CEO of Aurora Cannabis, the company is willing to undertake more M&A deals in the future in order to expand its medical marijuana business.
CEO’s comments late last week come on the heels of the marijuana producer’s surprise second-quarter top-line profit, which showed green numbers, thanks to cost savings it had been taking since early 2020.
During an interview, the CEO said, “The net cash position gives us the opportunity to do M&A.” It is quite possible that the firm will focus its acquisitions on medical infrastructure or medical assets, “something that adds to medicine would be more interesting to us than maybe others,” he added.
According to the earnings release shared a day earlier, Aurora was shown to have approximately $232 million in cash, including $48.70 million in restricted cash as of Feb. 8. About six months earlier, Aurora paid a little more than $33 million to acquire a majority stake in agricultural company Bevo Agtech. “I think the type of M&A we would do would be consistent with what you saw with Bevo, a predictable profitable business … stable,” Martin said.
With moves like these, companies can increase competitiveness, eliminate duplication and rationalize costs. They can achieve higher returns in the medium to long term because of the synergies created if such transactions are generated between companies in the same industry. In addition, business consolidation and a stronger market position are achieved. Martin said the main focus is on the medical sector, so Aurora would solidify its leading position in the market.