Aurora Stock Down 4% As Company Sells Off Remaining TGOD Shares

Aurora Stock

Aurora Cannabis Inc (TSX:ACB) (NYSE:ACB) has sold off its remaining shares in The Green Organic Dutchman (TSX:TGOD) (OTCQX:TGODF) as Aurora stock dips 4%.

TGOD and Aurora Stock Drops

Aurora announced this morning that the company had disinvested its remaining 28,833,334 shares in The Green Organic Dutchman, representing a 10.5% of the issued and outstanding shares, at a price of $3.00 CAD per share, which amounts to gross proceeds of $86.5 million USD. As a result of the sale, both stocks are in the red this morning with Aurora shares dropping 4%, while TGOD stock is down over 15%. According to a statement from Aurora, the sale was made to a syndicate of Canadian banks of which it is believed includes BMO and CIBC. Aurora stock is trading at its lowest point this year.

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Who Benefits the Most from This Sale?

While TGOD stock has dropped more of its value than Aurora off the back of this trade, it might actually work out better for the Dutchman. Aurora Cannabis had originally invested in The Green Organic Dutchman in January 2018, taking a 17.63% stake in the company, holding 33.3 million shares at a price of $1.65. As part of this investment, Aurora also gained certain rights over TGOD under the Investor Rights Agreement, which meant TGOD had to share a certain amount of its cannabis stock with Aurora. Therefore, today's deal actually benefits TGOD's revenue and gross margin and should boost TGOD stock long term.

On the other side, this deal obviously represents a profitable transaction for Aurora but also highlights the company's need for increased liquidity, which may be the main reason Aurora stock has dropped off following the deal. In a statement, Aurora CEO Terry Booth said, "When we acquired Whistler Medical Marijuana Corporation (in January) – an iconic and premium organic cannabis producer – our interest in TGOD became less important to our core strategy." It may be that Aurora is redirecting its investment into Whistler Medical.

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