Aurora Cannabis Inc. (TSX: ACB) (NYSE: ACB) entered into a letter of intent to acquire all the issued and outstanding shares of privately held Whistler Medical Marijuana Corporation in an all-stock deal valued at up to approximately $175 million, including certain milestone payments.
Whistler has developed one of Canada’s organic certified BC bud. The acquisition is sure to set the company up to compete with The Green Organic Dutchman (CSE: TGOD) by providing Aurora with a premium organic certified product suite. Whistler said it has differentiated large-scale cold-water extraction technology and processes, creating a full suite of organic certified oil products (including THCA, CBG, and high CBD oils).
“This transaction adds an iconic, organic certified BC-based brand with exceptional traction and a significant price premium in both the medical and retail markets,” said Terry Booth, CEO of Aurora. “We intend to accelerate the completion of Whistler’s Pemberton expansion project and leverage our domestic and international distribution channels to increase market reach for their exceptional products.”
According to the company statement, Whistler operates two indoor licensed production facilities, with its first located in Whistler, British Columbia, and the second, a recently licensed, purpose-built, state-of-the-art facility located a 20-minute drive from the Whistler facility. Once the second facility reaches full capacity (anticipated for Summer 2019) the facilities are anticipated to have a combined production capacity of over 5,000 kg per year. Whistler sells medical cannabis derivatives internationally to both Australia and the Cayman Islands, and through the addition of Aurora’s deep experience in completing EU GMP certified facilities and its large global distribution network, Aurora plans to pursue additional international export opportunities.
Christopher Pelz, CEO, and Founder of Whistler said, “With its commitment to the highest product quality standards, as well as its large footprint in both the Canadian and international cannabis markets, Aurora is the ideal partner for Whistler to enhance our growth and margin profile. We feel there is a strong cultural fit, and believe that Aurora is the right home for us to maintain our organic craft cultivation identity while being able to leverage the resources and capabilities of a large and rapidly growing global company.”
Another reason Aurora may be willing to buy Whistler is that it has “achieved positive cash flow since 2015, with EBITDA margins in excess of 30%. By ensuring consistency, quality, and maintaining its organic commitment, Whistler has achieved average selling prices in excess of 50% greater than the average Canadian medical market, and maintains a similar premium to provinces for adult-use.”