The cannabis market is set for a major shake-up today as Canadian weed producer Aurora Cannabis (TSE:ACB) closes a deal to purchase CanniMed (TSE:CMED) for $1.1B CAD ($852M USD). The purchase comes after weeks of bitter discussion between the rival companies.
The deal sees CanniMed’s stocks on a high rise today, sitting at a record high of $43.27 CAD as of 1:12 pm EST – up 15.36% in the last 24 hours. This brings their market cap to $1.05B. The company has been operating publicly and independently since December 2016 following an IPO which raised nearly $70M CAD, though it had been in operation under Prairie Plan Systems since 2013. It is also Canada’s first licensed medical marijuana producer.
Aurora has been making heated moves to take over CanniMed since November when it offered a bid capped at $24 CAD per share for the company – significantly lower than CanniMed was willing to accept. And it’s no surprise; the cannabis industry has been booming recently, particularly in Canada where sweeping legislation is expected to legalize recreational use of the drug nation-wide this year.
CanniMed has also recently been engaged in a proposed merger with Newstrike (CVE:HIP), owner of Up Cannabis, Inc. The deal, which is now terminated, was viewed favorably by Newstrike shareholders, but Aurora warned that a deal could not be struck with CanniMed if they went through with the Newstrike acquisition. It is now unclear what will happen in regards to Newstrike, though there was speculation that Aurora had been looking to acquire both CanniMed and Newstrike in one go.
Past bickering aside, what does today’s deal mean for the industry? For one thing, it marks the largest deal in the industry to date. Second, it would mean that the Aurora-CanniMed entity would have a market value of $7.8B CAD, overtaking Canopy Growth Corp. (TSE:WEED) to become the largest marijuana company in the world by market value. Despite this, Canopy would maintain its top spot in terms of sheer production; Canopy’s Tweed Farms greenhouse is the largest marijuana-producing greenhouse in the world (‘certainly legally’, they say).
Today’s acquisition is expected to increase cannabis production in Canada by a wide margin in preparation for a surge in demand. The cannabis market has been increasingly intriguing investors as mergers, acquisition, and recreational legality boost industry stock. Get involved!
More cannabis news: Why is Freedom Leaf Inc. Up Nearly 90% Today?
Aphria Acquires Broken Coast Cannabis: Stock Rises Nearly 20%
Featured Image: Twitter
