Aurora Cannabis (TSE: ACB) is looking to expand its portfolio once again. It has reportedly signed a letter of intent (LOI) with Hempco Food and Fiber that will see the cannabis giant acquire all of the shares – both issued and outstanding – of the hemp-based food company. The shares will be purchased for about $0.77 apiece, with a final price tag of around $47.22 million.
Aurora already controls 52% of Hempco, so the acquisition isn’t a strange deal. Hempco manufactures hemp-based foods, hemp nutraceuticals and hemp fiber under the brands Planet Hemp and Praise. Its products are found on eCommerce platforms such as Metro, Well.ca and Amazon, and Hempco is currently building a new production facility in Canada that will measure around 56,000 square feet.
Terry Booth, Aurora’s CEO, states, “This transaction will enable us to fully integrate Hempco and its new Nisku processing facility into Aurora’s global hemp operations including Agropro, Borela and ICC. Our goal is to strengthen our CBD-from-hemp supply chain as well as our hemp business of hemp-based superfoods, nutraceuticals and fibers. With vertical integration, product innovation expertise, and global reach, we are well positioned to extend our market share in these potential multibillion-dollar industries.”
Under the terms of the LOI, the transaction will be managed through an arrangement approved by the Canadian courts in accordance with the Business Corporations Act (British Columbia), or through another structure to be approved by both Aurora and Hempco. That structure would have to incorporate language covering tax, corporate law and securities considerations.
Hempco’s outstanding options and warrants will be calculated and adjusted according to the terms of the agreement and the volume-weighted average trading price of Aurora shares on the Toronto Stock Exchange in the five trading days preceding the agreement. The payment for the shares will be made in Aurora shares at a deemed value of $8.95 per share. Once the deal is complete, Hempco will be a wholly-owned subsidiary of Aurora.
The transaction is expected to be signed before the end of the second quarter of this year.