Aurora Cannabis – a Canada-based leading global medical cannabis company – announced that a wholly-owned subsidiary of the company acquired the remaining approximately 90% equity interest of Indica Industries Pty Ltd that Aurora did not previously own, at an enterprise value of AUD$50 million, subject to customary adjustments. Aurora paid AUD$9.45 million in cash with the balance of the purchase price satisfied by the issuance of common shares of Aurora.
MedReleaf Australia is a leading distributor of medical cannabis products and holds the #2 position in the Australian medical cannabis market. And this market is currently estimated to be worth approximately AUD$400 million and has quickly become one of the largest nationally legal global medical cannabis markets outside of Canada.
The medical cannabis market in Australia is characterized by a clinician-led traditional pharma-like product distribution model that aligns with Aurora’s operational success in other key global medical cannabis markets such as Germany. And since first partnering with MedReleaf Australia in 2017, Aurora actively contributed to the region’s recent growth, leveraging the Company’s pharmaceutical grade cultivation and global approach to product innovation. The deal is expected to provide a meaningful platform for Aurora to continue growing its leading global medical cannabis position in Australia and other APAC countries.
This is the rationale for the acquisition:
1.) Supports Aurora’s Global Cannabis Leadership – Strengthens Aurora’s presence in Australia, a region experiencing significant growth in medical cannabis adoption, which further solidifies its position as a leading global cannabis company.
2.) Utilizes Aurora’s Strength in Providing Pharmaceutical Grade Cannabis – The Australian model is medical focused and clinician-led and consistent with other markets where Aurora has achieved success. And the acquisition demonstrates the company’s deliberate approach to pursuing market growth that more closely mirrors typical pharmaceutical industries.
3.) Expands Margins of Australian Business Model – The deal is expected to improve Revenue contributions and Gross Margins to further align our Australian business with our other key profitable international markets, most notably Germany, Poland and the United Kingdom.
4.) Supports Aurora’s Path to Profitability – MedReleaf Australia generated trailing 12-month net revenue of about AUD$40million (as of December 31, 2023) and was adjusted EBITDA and operating cash flow positive. The company expect this deal to be immediately accretive and will support and accelerate Aurora’s plan to achieve positive free cashflow in calendar 2024.
Aurora (through its wholly owned subsidiary) purchased the remaining approximately 90% equity interest of MedReleaf Australia at a total enterprise value of AUD$50 million subject to customary adjustments. And as consideration, Aurora issued the selling shareholders an aggregate of approximately 69.5 million Aurora Shares; and paid the selling shareholders AUD$9.45 million in cash, subject to customary adjustments post-closing. About 10% of the Consideration will be held in escrow to ensure certain obligations of the selling shareholders.
KEY QUOTES:
“The acquisition of MedReleaf Australia represents a strategic milestone in Aurora’s global cannabis leadership, demonstrating our commitment to investing in markets that offer opportunities for sustainable and profitable growth. We are excited to solidify our position in this rapidly growing market and the opportunity this transaction presents to us in accelerating our plans to deliver positive free cash flow in calendar 2024.”
– Miguel Martin, Chief Executive Officer of Aurora
“We’re proud to have built one of Australia’s leading medical cannabis companies, thanks to our main supplier Aurora, dedicated investors, and dynamic team. Through our vision, we’ve connected clinicians with patients nationwide, positively impacting thousands of lives. This transaction marks an important step for MedReleaf Australia’s ongoing growth, as we believe medical cannabis is now mainstream medicine, and we’re grateful to be part of that story.”
– Russell Harding and Nathan Davis, Co-founders of MedReleaf Australia
