One of the nation’s leading medical cannabis product distributors, MedReleaf Australia, has been acquired by Aurora Cannabis in a cash-and-share deal that values the Brisbane-based company at $50 million.
The agreement sees the Canadian cannabis producer take control of the remaining 90 per cent it did not already own in MedReleaf, forking out $9.45 million in cash with the remainder paid for by issuing the vendors 69.5 million Aurora Cannabis Inc (TSE: ACB) shares on the Toronto Stock Exchange.
The $50 million valuation for the Australian company represents around a sixth of Aurora's market capitalisation of CAD$257 million ($293.8 million). The group's shares have however lost more than half their value over the past 12 months.
MedReleaf has a longstanding relationship with Aurora since 2017, having only just been founded by Russell Harding and Nathan Davis the previous year.
MedReleaf, which has facilities in Canada and Australia, also holds licences from the Federal Government’s Office of Drug Control (ODC) to import as well as cultivate and manufacture medical cannabis.
"We're proud to have built one of Australia's leading medical cannabis companies, thanks to our main supplier Aurora, dedicated investors, and dynamic team,” Russell Harding and Nathan Davis said in today's announcement.
“Through our vision, we've connected clinicians with patients nationwide, positively impacting thousands of lives.
“This transaction marks an important step for MedReleaf Australia's ongoing growth, as we believe medical cannabis is now mainstream medicine, and we're grateful to be part of that story."
Based in Edmonton, Aurora focuses on both medical and recreational cannabis production and sales. The company also offers patient education and clinic counselling services, home hydroponic cultivation, extraction technologies and delivery systems, and hemp-based food health products.
Post-transaction, MedReleaf will join a portfolio of cannabis producers and distributors including Canadian brands CanniMed and Whistler Medical Marijuana Co, as well as German-based Pedanios.
According to pharmacy data specialist NostraData, last year saw significant growth in medicinal cannabis sales in Australia, with annual sales exceeding $165 million. This represents a 60 per cent boost on the prior year, based on an extensive analysis of sales data from more than 4,500 pharmacies.
MedReleaf Australia generated net revenue of $40 million in the year to December 31 2023 and is operating cash flow positive.
Aurora CEO Miguel Martin said the acquisition demonstrates the company’s commitment to investing in markets that offer opportunities for sustainable and profitable growth.
"We are excited to solidify our position in this rapidly growing market and the opportunity this transaction presents to us in accelerating our plans to deliver positive free cash flow in calendar 2024,” he added.
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