Aurora Cannabis (TSX: ACB) (NYSE: ACB) has announced that it has acquired privately-held Whistler Medical Marijuana in an all-share transaction.
The company bought all issued and outstanding shares of Whistler under the terms of an agreement among Whistler, Aurora, and a wholly-owned subsidiary of Aurora.
In a separate statement, Cronos Group (NASDAQ: CRON) (TSX: CRON) said that it sold all of its common shares of Whistler to Aurora for a total purchase price of about C$175 million, payable by the issuance of common shares in the capital of Aurora.
Whistler Business
British Columbia-based Whistler is the developer of one of Canada’s most iconic cannabis brands. It offers cannabis products to both patients and consumers.
Founded in 2013, Whistler is one of Canada’s original 10 licensed producers and was the first licensed producer to obtain organic certification and sell a full suite of organic certified cannabis products. It currently sells medical cannabis derivatives internationally to both Australia and the Cayman Islands.
In addition to its existing supply arrangements in Ontario, British Columbia, Saskatchewan, and the Yukon, the company has received product requests from Alberta and Manitoba.
The company operates two indoor licensed production facilities in British Columbia. The first is located in Whistler, while the second licensed, purpose-built facility is located in Pemberton. The Pemberton facility is expected to reach its full capacity in summer this year. As a result, the facilities are anticipated to have a combined production capacity of over 5,000 kg per year, expandable to well more than 15,000 kg through future expansion at the Pemberton site.
Whistler has achieved positive cash flow since 2015, with EBITDA margins in excess of 30%. It has achieved average selling prices exceeding 50% more than the average Canadian medical market.
“Applying certain of our best practices to the Whistler cultivation protocols, we anticipate an increase in capacity of the Pemberton facility beyond the stated 5,000 kg annual production target. Furthermore, in pursuing EU GMP certification, we expect, once certified, to offer Whistler’s premium organic flower and derivative products in the much higher margin EU medical cannabis market, further increasing the accretive nature of this transaction,” Aurora CEO Terry Booth said in a statement.
Whistler Acquisition
Aurora has issued 13,667,933 common shares to Whistler shareholders.
Under the terms of the agreement, the company will pay two milestone payments of C$30 million and C$10 million to Whistler shareholders in its shares at the volume weighted average trading price of its shares in the five trading days immediately prior to the date of issuance.
The first milestone payment will be issuable upon satisfactory licensing of Whistler’s Pemberton facility. The second payment will be issued on the earlier of March 1, 2020, and the date on which Whistler achieves full production in accordance with the terms of the agreement.
“Now that this transaction is complete, we intend to accelerate development of Whistler and leverage its iconic brand globally,” Booth stated.