Ontario medical marijuana producers plan major merger


A southwestern Ontario greenhouse firm billed as one of Canada’s lowest-cost medical marijuana producers plans to expand its reach by buying a rival firm sourcing cannabis worldwide for processing.

Aphria Inc., based at Leamington, Ont., announced Monday it has locked in a cash-and-stock deal to buy Toronto-based Nuuvera Inc. for $826 million.

The deal, expcted to close in April, is one of several major plays in the marijuana sector ahead of Canada’s plans to legalize recreational cannabis use later this year.

Two other players, Edmonton’s Aurora Cannabis and Saskatoon’s CanniMed Therapeutics, announced a friendly $1.1 billion cash-and-stock merger last week.

Aphria’s own plays so far this month have also included a $230 million cash-and-stock deal for Vancouver Island producer Broken Coast Cannabis, and $2.5 million for a 25 per cent stake in Australian medical cannabis firm Althea Co.

Aphria said its latest deal will allow it to leverage Nuuvera’s relationships with suppliers and processors in Germany, Italy, Spain, the U.K., Malta, Israel, Lesotho and Uruguay, along with the Toronto firm’s expertise in extracting, distilling and processing medical-grade cannabis derivatives.

The merged company expects to unlock value through “supply chain efficiencies, cross-selling and upselling to customers through a broader product portfolio (and) developing a more diverse customer base.”

Buying Nuuvera also gives Aphria access to “the only standalone Health Canada GMP-approved facility… authorized and dedicated under its controlled drugs and substances licence to conduct commercial-scale activities with respect to cannabis and cannabinoids.”

“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,” Aphria CEO Vic Neufeld said in a release.

The deal, subject to the usual approvals from shareholders and regulators, would see Aphria pay $8.50 per Nuuvera share in the form of $1 cash plus 0.3546 Aphria shares.

The deal calls for two-thirds approval from Nuuvera shareholders, of which Aprhia already has “irrevocable hard lock-ups” covering about 57 per cent of outstanding shares, counting Aphria’s existing 6.5 per cent stake in the Toronto firm. It also calls for a $25 million break fee if Nuuvera walks away for a higher bidder. — AGCanada.com Network

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