- Thrive's highly experienced and trusted cannabis team in
craft cultivation, product innovation, and operational execution
will lead Aurora's Canadian recreational business
- Expands Aurora's brand offering with Greybeard, an
award-winning, super-premium, high margin brand regarded for its
budtender appreciation
- Transaction is expected to close in Aurora's Q4 fiscal 2022,
contribute immediate positive EBITDA and support Aurora's goal to
reach EBITDA profitability in the first half of fiscal
2023
NASDAQ | TSX: ACB
EDMONTON, AB,
March 22, 2022
/PRNewswire/ - Aurora Cannabis Inc. (the "Company" or
"Aurora") (NASDAQ: ACB) (TSX: ACB), the Canadian company
defining the future of cannabinoids worldwide, is pleased to
announce today that the Company has reached an agreement to acquire
all of the issued and outstanding shares of TerraFarma Inc. (parent
company of Thrive Cannabis) ("Thrive") (the
"Transaction"). The Transaction is based upon aggregate
consideration of $38 million (the
"Initial Consideration") payable in cash and Aurora common
shares ("Aurora Shares"), plus two earnout amounts (the
"Earnout Consideration") payable in Aurora Shares or cash
(at the election of Aurora), if applicable, based on Thrive
achieving certain revenue targets within two years of closing of
the Transaction.
The Transaction is expected to strategically strengthen Aurora's
position in the Canadian market by placing the Thrive team in
charge of Aurora's Canadian recreational portfolio, advancing the
shift in focus to innovative premium products including dried
flower, pre-rolls, vapour products, and concentrates. The
Transaction is expected to close, subject to customary closing
conditions, in Aurora's fiscal Q4 2022. It is anticipated that the
Transaction will provide immediate positive Adjusted EBITDA to
Aurora, and support the Company's path to Adjusted EBITDA
profitability in the first half of fiscal 2023.
Founded in 2018, Thrive is a licensed producer of super-premium
cannabis concentrates and craft dried flower, and leverages
innovative cultivation and extraction techniques with a singular
focus on achieving the highest quality standards. Thrive is most
widely known for its award-winning flagship recreational brand,
Greybeard Cannabis Co. ("Greybeard"), which amongst other
accolades was recognized as the #1 brand recommended by Canadian
budtenders in 2021, and was the 2021 winner of Best Concentrate
from the Kind Magazine Awards, as voted for by budtenders.
Management Commentary
"As consolidation among licensed producers accelerates, it's
vital that any transactions we make, now or in the future, be
strategic, accretive, and centred around adding exceptional talent
and brands that align with our path to profitability," said
Miguel Martin, Chief Executive
Officer of Aurora. "In these respects, Geoff and the Thrive team
have a track record seldom found elsewhere in the Canadian market.
They are truly exceptional cultivators who have gained trust with
consumers and developed products that have been recognized and
acclaimed by Canadian budtenders and industry peers. We see a
unique opportunity to leverage their expertise to deliver near and
long-term benefits for both our recreational and medical markets,"
he continued.
"This transaction supports our path to profitability while
ensuring that we are strategic in our M&A activity. Thrive's
achievement of positive standalone EBITDA, combined with their
exceptional operational and brand capabilities, truly set them
apart, and we look forward to leveraging their expertise as we
embark together on Aurora's path to profitability," he
concluded.
"We are excited to be joining a team that shares our vision for
delivering the highest quality, premium cannabis products to
consumers in a way that generates sustainable profitability," said
Geoff Hoover, Chief Executive
Officer of Thrive. "We look forward to combining our best-in-class
products and innovation pipeline with Aurora's depth of operational
capabilities, robust route to market and shared focus on superior
science and genetics that is critical for advancement in this
sector. This combining of two great companies will be
transformative."
Strategic Rationale
Supports Aurora's Timeline to Profitability with Positive and
Growing EBITDA: Transaction is aligned with Aurora's plan to
achieve profitability in H1/FY23 on an Adjusted EBITDA basis.
Thrive has achieved positive standalone EBITDA in the last 12
months ended December 2021, with
additional cost synergies expected to drive further EBITDA
growth.
Acquisition of Two Leading Cannabis Brands Synonymous with
Quality & Consistency: Thrive adds two new brands to
Aurora's portfolio, both of which have rapidly gained market share
over the last twelve months and are expected to flourish with
additional resources on Aurora's platform:
Greybeard is an ultra-premium,
high-terpene, high-potency brand with a world class lineup of
concentrates that has quickly developed recognition with budtenders
and cannabis connoisseurs. Concentrates are produced using a
proprietary hydrocarbon extraction and refining process that
maximizes the cannabinoids and terpene content, resulting in
aromatic and flavourful products that highlight the unique
characteristics of each strain. Greybeard also utilizes industry
leading cultivation practices to offer super-premium, small batch,
AAAA quality dry flower and pre-rolls, featuring large pristine
buds grown in its indoor facilities.
Being Cannabis is a
wellness-oriented brand known for their sublingual THC and CBD
strips. These fast-acting and precisely dosed sublingual strips
dissolve under the tongue and don't require any accessories or
preparation.
Addition of Highly Experienced Management Team with Leading
Operational and Cultivation Expertise: Transaction will
add a talented management team comprised of industry veterans with
leading cannabis cultivation, extraction, and product development
expertise. The Thrive team leading Aurora's Canadian recreational
business will drive significant improvements to the consistency,
quality, and yield of Aurora's cannabis products across the
portfolio.
Robust Product Pipeline Led by Expansive Genetics
Library: Thrive brings a genetics library that has consistently
delivered 24%+ THC potency, high yielding (80g+ / plant) and
disease-resistant cultivars. These new cultivars, along with
various SKUs in the development pipeline for Greybeard and Being,
will deliver innovative and on-trend products to Canadian
consumers.
Transaction Details and Timing
The Transaction will be effected by way of a three-cornered
amalgamation whereby Thrive will amalgamate with a wholly-owned
subsidiary of Aurora resulting in Aurora owning all of the issued
and outstanding shares of the amalgamated entity in exchange for
the Initial Consideration to be issued to Thrive shareholders on a
pro rata basis at deemed price per Aurora
Share equal to the volume weighted average trading price
("VWAP") of Aurora Shares on the Toronto Stock Exchange ("TSX") for
the 5 trading days immediately prior to the second business day
prior to the effective date of the Transaction. The sum of
$3 million of the Initial
Consideration is subject to a holdback to be released on the
18-month anniversary of the closing of the Transaction subject to
adjustment for any indemnification claims. The Earnout
Consideration consists of up to $10
million for satisfying certain near-term revenue targets and
up to $20 million for satisfying
certain long-term revenue targets within 2 years of the closing of
the Transaction, each payable in cash, Aurora Shares or a
combination of both (at the election of Aurora).
The number of Aurora Shares to be issued under the Earnout
Consideration, if any, will be calculated based on a deemed price
per Aurora Share equal to the VWAP
of Aurora Shares on the TSX for the 5 trading days immediately
prior to the applicable earnout payment date.
The Transaction is subject to receipt of regulatory, third party
and Thrive shareholders' approvals and other customary closing
conditions and expected to close in Aurora's fiscal Q4 2022. Lazard
Canada Inc. is acting as exclusive financial advisor to Aurora in
connection with the Transaction. McMillan LLP is serving as legal
counsel to Aurora.
About Aurora Cannabis
Aurora is a global leader in the cannabis industry, serving both
the medical and consumer markets. Headquartered in Edmonton, Alberta, Aurora is a pioneer in
global cannabis, dedicated to helping people improve their lives.
The Company's adult-use brand portfolio includes Aurora Drift, San
Rafael '71, Daily Special, and Whistler, as well as CBD brands,
Reliva and KG7. Medical cannabis brands include
MedReleaf, CanniMed, Aurora, Whistler Medical Marijuana Co, and
Pedanios. Driven by science and innovation, and with a focus on
high-quality cannabis products, Aurora's brands continue to break
through as industry leaders in the medical, performance, wellness
and adult recreational markets wherever they are launched. Learn
more at www.auroramj.com and follow us on Twitter and
LinkedIn.
Aurora's common shares trade on the NASDAQ and TSX under the
symbol "ACB" and is a constituent of the S&P/TSX Composite
Index.
About Thrive Cannabis
Founded in 2018, Thrive Cannabis is a vertically integrated
cannabis company based in Simcoe,
Ontario. Thrive is most widely known for its award-winning
flagship adult-use brand, Greybeard Cannabis Co., which specializes
in premium quality, small-batch craft cannabis concentrates and
flower products. Thrive is also known for its adult-use
wellness-oriented brand, Being. The Thrive team leverage their
expertise in cannabis cultivation, extraction and product
development with a singular focus on delivering the highest quality
standard products to consumers. Learn more at
www.thrivecannabis.ca.
Forward Looking Information
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable
securities law ("forward-looking statements"). Forward-looking
statements are frequently characterized by words such as "plan",
"continue", "expect", "project", "intend", "believe", "anticipate",
"estimate", "may", "will", "potential", "proposed" and other
similar words, or statements that certain events or conditions
"may" or "will" occur. Forward-looking statements made in this news
release include statements regarding the Transaction, including,
but not limited to: the expected timing for closing of the
Transaction; the impact of the Transaction on the Company's
premiumization strategy and position in the Canadian recreational
market; the impact of the Transaction on the Company's path to
profitability and goal to achieve Adjusted EBITDA profitability in
the first half of fiscal 2023; near and long-term benefits for the
recreational and medical markets; the addition and advancement of
Thrive's brands to Aurora's portfolio, including the development of
innovative and on-trend products to Canadian consumers; and the
addition of a new management team to lead the Canadian recreational
business and expected improvements to Aurora's cannabis products
across the portfolio.
These forward-looking statements are only predictions.
Forward looking information or statements contained in this news
release have been developed based on assumptions management
considers to be reasonable. Material factors or assumptions
involved in developing forward-looking statements include, without
limitation, publicly available information from governmental
sources as well as from market research and industry analysis and
on assumptions based on data and knowledge of this industry which
the Company believes to be reasonable. Forward-looking statements
are subject to a variety of risks, uncertainties and other factors
that management believes to be relevant and reasonable in the
circumstances could cause actual events, results, level of
activity, performance, prospects, opportunities or achievements to
differ materially from those projected in the forward-looking
statements. These risks include, but are not limited to, the
ability to retain key personnel, the ability to continue investing
in infrastructure to support growth, the ability to obtain
financing on acceptable terms, the continued quality of our
products, customer experience and retention, the development of
third party government and non-government consumer sales
channels, management's estimates of consumer demand in Canada and in jurisdictions where the Company
exports, expectations of future results and expenses, the risk of
successful integration of acquired business and operations,
management's estimation that SG&A will grow only in proportion
of revenue growth, the ability to expand and maintain distribution
capabilities, the impact of competition, the general impact of
financial market conditions, the yield from cannabis growing
operations, product demand, changes in prices of required
commodities, competition, and the possibility for changes in laws,
rules, and regulations in the industry, epidemics, pandemics or
other public health crises, including the current outbreak of
COVID-19, and other risks, uncertainties and factors set out under
the heading "Risk Factors" in the Company's annual information form
dated September 27, 2021 (the "AIF")
and filed with Canadian securities regulators available on the
Company's issuer profile on SEDAR at www.sedar.com and filed with
and available on the SEC's website at www.sec.gov. The
Company cautions that the list of risks, uncertainties and other
factors described in the AIF is not exhaustive and other factors
could also adversely affect its results. Readers are urged to
consider the risks, uncertainties and assumptions carefully in
evaluating the forward-looking statements and are cautioned not to
place undue reliance on such information. The Company is under no
obligation, and expressly disclaims any intention or obligation, to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
expressly required by applicable securities law.
Non-GAAP Measures
This news release contains reference to certain
financial performance measures that are not
recognized or defined under IFRS (termed
"Non-GAAP Measures"). As a result, this data may not be comparable
to data presented by other licensed producers of cannabis and
cannabis companies. Non-GAAP Measures in this news release include,
but are not limited to, "Adjusted EBITDA". For an explanation of
these measures to related comparable financial information
presented in the consolidated financial statements prepared in
accordance with IFRS, refer to the Company's news release of
February 10, 2022, a copy of which is
available under the Company's profile on SEDAR at www.sedar.com.
Non-GAAP Measures should be considered together with other data
prepared in accordance with IFRS to enable investors to evaluate
the Company's operating results, underlying performance and
prospects in a manner similar to Aurora's management. Accordingly,
these non-GAAP Measures are intended to provide additional
information and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
IFRS. Neither the TSX nor its Regulation Services Provider
(as that term is defined in the policies of the TSX) accepts
responsibility for the adequacy or accuracy of this
release.
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SOURCE Aurora Cannabis Inc.