Aurora Cannabis Inc. bolstered its international presence Thursday with a deal to buy the 90 per cent of Australian medical cannabis company MedReleaf Australia it didn’t already own.
The deal valued the Australian medical cannabis distribution company, formally known as Indica Industries Pty Ltd., at $50 million (Australian) or about $44 million in Canadian dollars.
Aurora, an Edmonton-based cannabis company, paid $9.45 million (Australian) in cash with the balance in common shares issued.
“(MedReleaf Australia) has done just a superb job building this business and we collectively thought this was the right time to take the next step,” Aurora chief executive Miguel Martin said on a Thursday call with analysts.
The deal, which came the same day as Aurora reported a third-quarter net loss of $25.5 million (Canadian), builds on a relationship Aurora has had with MedReleaf Australia since 2017.
The Australian medical cannabis market is clinician-led and uses a traditional pharma-like product distribution model, Aurora said.
Australia’s medical cannabis industry has experienced significant growth since 2016 and is now an estimated $400-million market, added Tamy Chen of BMO Capital Markets.
“We believe Aurora shareholders may question the decision to fund most of this (deal) with shares when the company has $200 million cash on hand and a narrowing cash burn,” she wrote in a note to investors Thursday evening.
“But management highlighted the importance of having some liquidity buffer to navigate the volatile cannabis industry.”
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