Published: Tue, May 15, 2018
Markets | By Otis Pena

Canadian weed growers agree to $2.3 billion takeover

Canadian weed growers agree to $2.3 billion takeover

Aurora Cannabis Inc will buy rival MedReleaf Corp for C$3.2 billion ($2.51 billion), the companies said on Monday, the biggest deal yet to unify major Canadian marijuana growers.

The deal announced Monday is the latest in a wave of mergers in the industry as marijuana producers - emboldened by pot legalizations in Europe and a number of US states - seek to cut costs and gain scale.

The move makes sense in Canada where regulations are more relaxed than in other countries, while the industry is mature there and there is plenty of capital to be spent.

Aurora Chief Executive Officer Terry Booth said there will be more consolidation in the industry. The worldwide legal marijuana market is expected to generate revenue worth $146.4 billion by end of 2025, according to California-based market consultancy by Grand View Research.

Aurora said it would pay Can$3.2 billion (RM9 billion) as part of an all-stock deal that will leave Aurora shareholders with control of 61 percent of the resulting company.

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Monday's deal eclipses what had previously been the industry's biggest deal: Aurora's C$775m acquisition of CanniMed Therapeutics, which was completed earlier in May.

Aurora Cannabis announced today its deal to take over medical marijuana company MedReleaf. The deal values MedReleaf shares at C$29.44, which is a 34 percent premium based on the. "Over the next couple weeks you'll see some more activity from Aurora", but nothing on the scale of the MedReleaf deal, he added.

Marijuana companies are also seeking to capitalise on investor enthusiasm.

Chief Corporate Officer Cam Battley said Aurora's goal is to "become nothing less than the world's largest cannabis company".

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