Aurora Cannabis Buys Reliva, Enters US CBD Market

Cornelia Mascio
Mag 23, 2020

Cantor Fitzgerald reiterated its overweight rating on shares of Aurora Cannabis Inc. on Thursday and raised its stock price target to C$27 ($19) from C$22, after the company announced a long-awaited push into the USA cannabis market, via the $40 million all-stock purchase of a cannabidiol maker called Reliva. The Reliva acquisition is a responsible strategic entry into the U.S. market. "Certainly, the consumer CBD industry faces temporary challenges in the USA, but the industry has long-term upside, valuations have pulled back, and we think Reliva has a unique channel and price positioning that allowed it to perform quite well pre-COVID", Zuanic wrote. "Similar to Aurora, Reliva has a strong entrepreneurial spirit and successful track record of transforming categories and creating growth brands".

"We plan to capitalize on each company's market leadership and sales infrastructure to drive higher revenue growth than either company could independently accomplish".

Edmonton-based Aurora will acquire all of the issued and outstanding membership interests of Reliva, while Reliva members will receive roughly US$40 million in Aurora's common shares.

According to Singer, the deal supports the short-term goal of Aurora achieving profitability in the next fiscal year and the longer-term goal of entering the US CBD and cannabis market.

Focus on regulatory, testing and compliance protocols.

Aurora said Reliva stood out among a long list of potential partners for its focus on regulatory, testing and compliance protocols; extensive experience selling and marketing regulated consumer packaged goods; deep relationships with critical trade partners that provide a United States national distribution footprint; and a track record of growth and profitability.

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