Aurora Cannabis Set To Buy MedReleaf in $3.2 Billion Canadian Takeover
Canadian marijuana giant, Aurora Cannabis is set to buy MedReleaf, the medical marijuana firm, for $3.2 billion in stock. Rumors have been floating around for weeks since the two companies began engaging in talks earlier this month, however, nothing had been confirmed until this morning.
Early on Monday morning, the two companies announced a merger that will result in Aurora Cannabis becoming the fastest growing company in the cannabis industry.
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"This is a transformational transaction that brings together two pioneering cannabis companies, both committed to high technology, high quality, and low-cost production, to create a powerful platform for accelerated growth and success on a global scale," said Aurora CEO Terry Booth.
Aurora Cannabis will offer MedReleaf 3.575 shares in their company in exchange for every share handed over by MedReleaf. At current market shares, this places MedReleaf at a $3.2 billion value. Aurora Cannabis was valued at $4.5 billion on Friday.
Combined, the two companies could be worth as much as $7 billion, which means Aurora now takes the top spot when it comes to the top valued cannabis companies in the cannabis industry. Canopy Growth Corp. previously held the top spot.
However, the deal hasn't gone through just yet. While the boards of both companies have endorsed the deal, shareholders on both sides need to first give the green light before the deal becomes official.
If the deal goes through, the combined power of the two companies would carry enough weight to produce 570,000 kg of cannabis per year. That's over 1 million pounds of marijuana.
Canada is set to legalize marijuana for recreational use this summer. Companies have been scrambling to consolidate themselves before recreational use goes through in order avoid unnecessary costs and inefficiencies that might damage profits when adult-use cannabis becomes legal.