In what has become a big day for marijuana stock news, Canadian marijuana producer Aurora Cannabis on Monday agreed to acquire rival MedReleaf in an all-stock deal worth $2.5 billion ($3.2 billion Canadian), the largest tie-up yet as the nation’s cannabis industry rushes to consolidate ahead of recreational legalization this year.
Meanwhile, Canada’s Canopy Growth filed to list on the NYSE, which would make it the first pure-play pot stock to trade on the exchange.
The Aurora-MedReleaf deal would give the company a footprint in Canada as well as Brazil, Australia, Denmark, Italy and Germany. Germany is set to become the world’s biggest nationally regulated marijuana market, Aurora Cannabis Chief Corporate Officer Cam Battley said during a conference call to discuss the deal.
The combined company would also have a bigger research team and be able to offer a broader range of marijuana products. Those include increasingly popular gels, topicals, and even dissolvable wafers.
On the conference call, Aurora Cannabis management said the deal also gave them access to more marijuana strains, some with high levels of cannabidiol and no THC. Cannabidiol is a nonpsychoactive component of the cannabis plant, often used as a relaxant or for pain relief.
In March, Aurora said it had begun its integration of CanniMed, which it acquired for $1.1 billion Canadian. During that month, Canadian producer Aphria also bought Nuuvera.
On the call, Aurora Chief Commercial Officer Cam Battley said the company would continue to look for other M&A opportunities. He said that over the past two years, Aurora had made 15 acquisitions or strategic investments.
As the company positions itself globally, the medical marijuana market could hit $180 billion “at maturity,” the company said. Battley said the company was “prepared to meet that demand,” citing its presence on five continents. Both Aurora and MedReleaf already produce according to Good Manufacturing Pracrices, Battley said, a quality metric he said would be important to gaining traction in the European Union.