Aurora announced it acquired U.S. hemp/CBD brand Reliva for USD$40M in an all-share transaction, finally achieving Aurora’s longtime plan to return to the U.S. in order to cash in on the American CBD craze. Aurora spun off its U.S. subsidiary Australis Capital in 2018.
PR Newswire, New York Times, MJ Biz Daily
- Interim CEO Michael Singer celebrated “immediate access into the world’s largest cannabinoid market,” though commentators warned Aurora to expect a significantly more competitive situation than in Canada.
- Because Reliva’s low-priced CBD drinks, gummies, creams, and other products are sold in 20,000 mass-market retail locations across the US, Aurora may be ready for the challenge–especially as Reliva has no debt and requires little capital outlay.
Yahoo Finance, BNN Bloomberg
- Canopy, meanwhile, just closed its U.S. hemp facility after producing overstock in 2019–it was one of many companies contributing to a hemp supply glut.
Hemp Industry Daily
Aurora’s shares jumped after the deal, which drew the scrutiny of some critics. Jeffries analyst Owen Bennett downgraded Aurora from “hold” to “underperform,” predicting more difficult months would still be coming for the company.
- Bennett noted Aurora is now the most expensive Canadian cannabis stock despite facing challenges it hasn’t resolved.
- Cowen analyst Vivien Azer said the “long-awaited” move into the U.S. market was “logical” and will help Aurora on its adjusted EBITDA.