A company headquartered in Edmonton has become the biggest legal pot business on the planet after announcing a $ 3.2-billion acquisition Monday.
Aurora Cannabis Inc. announced it intends to buy all common shares of MedReleaf Corp, merging two of Canada’s biggest cannabis companies into one that is worth as much as $ 7 billion.
That’s more than Canadians spent on cannabis in all of 2017.
“We are creating the largest cannabis producer in the world,” Aurora’s chief corporate officer Cam Battley said.
According to Statistics Canada, Canadians spent $ 5.7 billion on weed in 2017, and 90 per cent of that was bought illegally.
According to an Aurora spokesperson, the deal has launched the company beyond the value of Ontario-based Canopy Growth.
Aurora said it will have the capacity to produce an industry-leading 570,000 kg of marijuana per year.
“Not only will we have sufficient product to service (the Canadian market), we’re going to have enough to greatly expand our global sales,” Battley said. “It’s an enormous capacity.”
MedReleaf specializes in medical marijuana, and Battley said it may be the only company in the sector with even better production efficiency than Aurora.
“We see many opportunities to share best practices to optimize yields and quality,” he said.
Battley promised Canadian medical patients will be the company’s first priority, ahead of recreational and international markets.
MedReleaf CEO and co-founder Neil Closner said the intent in combining the two companies is to “leverage each other’s strengths.”
The merged company will be present on five continents, with distribution capabilities and supply and licensing agreements in countries including Germany, Italy, Brazil and Australia.
Aurora has established an Alberta distribution agreement with Alcanna, the company that owns Liquor Depot stores. It was known as Liquor Stores N.A. before rebranding this spring with intent to enter the cannabis market.
Aurora also has a national distribution deal with Shoppers Drug Mart.
Aurora is building an 800,000-square-foot growing facility on the Edmonton International Airport land that is the world’s biggest marijuana production space.
In April, the company announced it would build an even bigger, 1.2-million-square-foot facility in Medicine Hat.
The company has moved its headquarters from Vancouver to founder Terry Booth’s hometown of Edmonton, buying office space downtown.
Under the terms of Monday’s agreement, MedReleaf shareholders will get 3.575 shares of Aurora for each common share held, and existing Aurora and MedReleaf shareholders would own about 61 per cent and 39 per cent of the new company, respectively.
The transaction still needs to be officially approved by shareholders and is subject to regulatory and court approval.