Canadian medical cannabis producer Aphria (TSX:APH) this morning announced it has signed a deal to acquire Broken Coast Cannabis for approximately $230 million. The majority of the payment will consist of shares valued at $15.09, with just $10 million being paid in cash. The news has prompted Aphria’s shares to rocket up by 20.8%, reaching a high of $21.57 as of 3:00 PM EST. This brings Aphria’s market cap to $3.2 billion.
The acquisition is expected to excite shareholders as the Canadian cannabis industry undergoes continued growth. Many investors will be looking forward to the Canadian government’s plans to enact sweeping legislation that will legalise cannabis recreationally across the entire country later this year.
Aphria prides itself on developing the most natural production methods it can, putting natural sunlight at the core of its 100% greenhouse-driven growing operation in Leamington, Ontario. With today’s acquisition, Aphria is looking to greatly increase its low-cost production output by approving the ‘immediate commencement’ of Broken Coast’s 60,000 square foot expansion that will more than double the facility’s annual growing capacity from 4,500 Kgs to 10,500 Kgs per year. The operation is expected to be completed by the end of summer, 2018.
Vic Neufeld, CEO of Aphria, said of the acquisition: “Broken Coast has proven that you can grow premium quality cannabis, charge a reasonable price and earn a profit all at the same time.
“We look forward to learning from each other and bringing more Broken Coast cannabis to current medical patients and future adult recreational use consumers in Canada.”
Cannabis production has caught the eye of many investors in recent months as stock prices steadily rise. Aphria’s own share value has increased around 282% from this time last year, along with the likes of Aurora Cannabis (TSX:ACB) and industry giant Canopy Growth Corporation (TSX:WEED), which have seen rises of 330% and 269% respectively. Canopy Growth Corp.’s market cap currently sits at $6.96 billion, which is huge for the industry.
Clearly, it’s time to keep an eye on cannabis stocks, if you aren’t already.
Featured Image: twitter
