Aurora Cannabis Agrees to Acquire Remaining Interest in Hempco Food and Fiber for C$63.4 Million

By April 20, 2019 No Comments

imageedit_226_7703264392Aurora Cannabis Inc. (NYSE: ACB) recovered significantly after a down day in the cannabis sector on Monday of this week. The company announced that it has agreed to purchase the remaining shares that the company hadn’t already owned of Hempco Food and Fiber Inc. (TSX-V: HEMP) for at $1.04 per share of Hempco Food for a total of C$63.4 million, or an approximate $47,513,228 USD. The two companies have agreed to and entered into a binding letter agreement where Aurora Cannabis, upon certain requirements, will own all of the remaining issued and outstanding shares of Hempco Food that it hadn’t already previously owned.

The transaction does still require a 2/3rds majority vote of approval by Hempco shareholders, approvals from regulatory agencies, and additional approval from related courts and other conditions that are customary with a business combination transaction.

Due to the earnings report that Aphria (NYSE: APHA) announced on Monday of this week, the cannabis sector sharply fell, and Aurora Cannabis was not apart from the rest of the pack. The value of Aurora Cannabis shares fell from the market open price of $8.78 per share on Monday, April 15th, to the lowest intraday price of $8.46 and closed on Monday at $8.51 per share for a decrease in value of 3.08%.

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The value of ACB shares quickly recovered the following day, April 16th, with the announcement of the binding letter of agreement to acquire the remaining interest of Hempco shares. Aurora’s share value increased and closed on Tuesday at $8.88, an approximate 4.29% increase in value from Monday’s close price of $8.51.

Investors who purchased shares at the lowest possible purchase price of $8.46 per share on Monday of this week would have seen a potential return on investment (ROI) of nearly 8% per share if they sold each share on April 17th at the intra-day peak of $9.13 per share. This possible purchase and sale of stock would have netted an investor a profit of $0.67 per share.

The author for this article does have a current position with Aurora Cannabis stock.

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