Debra Borchardt
Canadian cannabis company Aurora Cannabis Inc. (ACBFF) acquired Agropro UAB, Europe’s biggest producer, processor, and supplier of hemp, and Borela UAB, a hemp processor and distributor for 5.36 million euros, or $6.2 million, in cash.
Grand View Research (Industrial Hemp Market Size, Share & Trends Analysis, 2018) has estimated that the industrial hemp market could grow to $10.6 billion by 2025. The hemp seed market, as a subcategory, is anticipated to show even stronger growth. Hemp seeds are already used in food and personal care products found in many grocery stores. The leaves and flowers produce cannabidiol (CBD) which can be found in some medical products, supplements and beauty products. The hemp stalk is prized for its fiber and hurd, used in paper products, building materials, clothing, and other textiles.
“Agropro’s position as Europe’s leading producer of premium organic hemp along with the significant and previously unutilized CBD production from the large quantities of currently discarded biomass, makes this an accretive acquisition and one that positions Aurora well to become a global leader in organic CBD-based wellness products, said Terry Booth, CEO, Aurora Cannabis.”
Skirmantas Nikstele Co-Founder & Chief Executive Officer of Agropro, added, “As the largest producer, processor, and supplier of organic hemp products in Europe, we have developed a strong reputation for quality and consistency with our customers across the globe. Through Aurora, we gain access to a wider distribution network, as well as an access to industry-leading science to help ramp up production, while enhancing margins through the introduction of new products, proven production techniques, and robust genetics.”
According to the company statement, Agropro and its sister company Borela UAB currently have 1,600 hectares or 4,000 acres under contract, potentially yielding more than 1,000,000 kg of organic hemp with additional contracts available to expand to more than 3,000 hectares across Lithuania, Latvia, Estonia, and Poland.
Aurora said its plan for the acquisition is to extract, refine and productize the organic hemp biomass into a wide range of organic CBD-based wellness products to generate new and significant revenue streams. Through its majority-owned subsidiary Hempco, Aurora is already executing on a number of hemp food market opportunities and intends to integrate Agropro’s organic supply and distribution with Hempco’s to enhance market access and accelerate the growth of high margin, premium hemp-based product offerings.
Terms of The Deal
The statement said that Aurora purchased 100% of the issued and outstanding shares of Agropro UAB and Borela UAB for total cash consideration of €5,364,000 (approximately C$8.1 million ) and common shares of Aurora equivalent to €960,000 (approximately C$1.4 million ), based on the 5-day VWAP as of September 10, 2018. In addition, Aurora will also refinance existing debt totaling €2,076,000 (approximately C$3.1 million ) and provide a finder’s fee totaling €1,517,400 (approximately C$2.3 million ).
