As part of a growing trend of consolidation in the Canadian cannabis market companies are positioning themselves ahead of the upcoming legalization. Aphria Inc. (TSX:APH) has now agreed to buy Nuuvera Inc. (TSX-V:NUU) for $8.50 per share, which values Nuuvera at approximately $826 million. This is a 21% premium over Nuuvera’s previous closing price of $7.00.
To those in the cannabis space, this deal is considered a direct follow-up on last week’s historic $1.1 billion merger between Aurora Cannabis Inc. (TSX:ACB) and CanniMed Therapeutics Inc. (TSX:CMED) to challenge Aphria at the top of the cannabis pyramid.
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“This transaction, which builds on a long-standing relationship between the two companies, brings together our top-tier ability to grow high-quality cannabis at a low cost with Nuuvera’s expansive international network, expertise in processing, and access to industry-leading technology," said Aphria CEO Vic Neufeld in a statement on Monday.
Through this acquisition, Aphria plans to leverage Nuuvera’s partnerships in Germany, Israel, Italy, Spain, and the United Kingdom to expand the company’s production capabilities and global presence. Combined with Aphria’s agreements in Australia, the company will have a "leading international footprint among Canadian licensed producers," the companies said Monday.
The two parties have been in talks for a while. Just over two weeks ago, they were in negotiations for an offtake agreement, which was executed a week later for 60,000 kilograms of annual cannabis production supplied to Nuuvera. As a result of this merger, Aphria will capture the retail margin of the cannabis supply earmarked under such offtake agreement.
>> Canadian Cannabis Legalization – Where Will It Take Us?
Nuuvera is not the only major deal Aphria was working on this month. On January 15, Aphria acquired Broken Coast Cannabis, an award-winning premium brand based in British Columbia, for approximately $230 million. It also committed to investing $10 million into the proposed merger between DOJA Cannabis Ltd. (CSE:DOJA) and TS Brandco Holdings Inc.
Following Monday’s announcement, Nuuvera shares jumped by as much as 20% to $8.44, while Aphria saw a slight dip of over 3%. Which cannabis company mergers would you want to see? Comment in the box below.
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