NYSE | TSX: ACB
- All Share Transaction – Immediately Accretive to Shareholders
on an Adjusted EBITDA Basis
- Profitable Today, Reliva Adds Strategic Entry to the U.S. that
is Aligned to Aurora's Business Transformation Plan
- Adds Miguel Martin, Veteran
International Consumer Packaged Goods Executive to Aurora
Management Team
- Reliva Provides Aurora with Top Ranked Retail Hemp-Derived CBD
Brand Currently Sold in Over 20,000 Mass Retail U.S. Locations
EDMONTON, May 20, 2020 /PRNewswire/ - Aurora Cannabis Inc.
(the "Company" or "Aurora") (NYSE | TSX: ACB), the
Canadian company defining the future of cannabinoids worldwide, and
Reliva, LLC ("Reliva") a leader in the sale of hemp-derived
CBD products in the United States,
are pleased to announce that they have entered into an
agreement pursuant to which Aurora will acquire all of the
issued and outstanding membership interests of Reliva. Under the
terms of the agreement, members of Reliva will receive
approximately US$40 million of Aurora
common shares. The transaction also includes a potential
earn-out of up to a maximum of US$45
million payable in Aurora shares, cash or a combination
thereof, over the next two years contingent upon Reliva achieving
certain financial targets. The structure of the earn-out is
designed to align risk and reward between Aurora shareholders and
Reliva management to focus on continued strong operational and
financial execution. The transaction is expected to close, subject
to customary closing conditions, in June
2020. It is anticipated that the transaction will be
immediately accretive to Aurora on an Adjusted EBITDA basis,
consistent with Aurora's objective to drive towards Adjusted EBITDA
profitability in its fiscal first quarter of 2021.
The transaction will combine Aurora's leading Canadian
recreational brands, and Canadian and European medical market
position with the leading U.S. hemp-derived CBD brand in retail
stores. Consistent with the announcement of Aurora's business
transformation plan in February 2020,
the Company has aligned its U.S. investment strategy with the goals
of the transformation plan, namely: financial discipline,
operational focus, and strong execution. The transaction represents
the culmination of a multi-month strategic evaluation of the U.S.
hemp-derived CBD industry. Reliva stood out among a lengthy list of
potential partners for its: (1) focus on regulatory, testing and
compliance protocols; (2) proven management team with extensive
experience selling and marketing regulated consumer packaged goods;
(3) deep relationships with critical trade partners that provide a
U.S. national distribution footprint; and (4) financial discipline
and track record of growth and profitability. Together with Reliva,
Aurora is expected to be positioned as a meaningful player in
the United States, the world's
largest cannabinoid market.
Management Commentary:
"Together, Aurora and Reliva will partner to create an
international cannabinoid leader that we believe can deliver robust
revenue and profitable growth," said Michael Singer, Executive Chairman and Interim
CEO of Aurora. "We have taken the time necessary to carefully
assess the Company's entry into the U.S. market and we firmly
believe that the combination with Reliva will create significant
long-term value as Reliva provides us options to grow in
hemp-derived CBD internationally. Similar to Aurora, Reliva has a
strong entrepreneurial spirit and successful track record of
transforming categories and creating growth brands. We welcome
Miguel Martin and his team to
Aurora, and look forward to the opportunity to increase our
operating scale, international reach, and product and brand
diversity as we drive to Adjusted EBITDA profitability. We plan to
capitalize on each company's market leadership and sales
infrastructure to drive higher revenue growth than either company
could independently accomplish."
Miguel Martin, CEO of Reliva
commented, "We're excited to join Aurora's leading platform as we
combine our highly complementary businesses and brands to build an
even stronger company for future international success. We were
fortunate enough to be able to choose our long-term partner and
believe this partnership provides a significant opportunity to
accelerate sales growth for Reliva in the
United States and internationally. I am particularly pleased
about the benefits that this combination will have for current and
future trade partners. With the assistance of Aurora, we believe
enhancements to Reliva's innovation, consumer insights and
marketing systems will allow our portfolio of hemp-derived CBD
products to become even more attractive to retailers and consumers
in this exciting new category."
Key Strategic and Financial Highlights:
The transaction will create a large and diversified pure-play
international cannabinoid company. Aurora believes the combination
will provide the following strategic and financial benefits:
- Immediately Accretive to Aurora Shareholders:
Transaction is aligned with Aurora's business transformation plan
announced in February 2020 and
provides immediate benefit to Aurora's objective to achieve
Adjusted EBITDA profitability in the first quarter of fiscal
2021
-
- Reliva has generated positive EBITDA in the last 12 months
ended March 2020
- Transaction is expected to be Adjusted EBITDA accretive to
Aurora shareholders in fiscal 2020 and fiscal 2021
- Reliva is debt free
- No capital expenditures or additional working capital
investment is currently required
- Addition of Experienced Management Team: The transaction
will add a talented U.S. management team, with strong international
consumer packaged goods backgrounds and a proven track record of
growth, to the core Aurora team
-
- Management has 40+ years of experience in sales and marketing
of regulated consumer packaged goods led by Miguel Martin, a 25 year CPG veteran
-
- Former President and General Manager of Logic Technology, one
of the largest manufacturers of electronic cigarettes
- Former Senior Vice President and General Manager of Altria
Sales & Distribution
- Upon closing of the transaction, Reliva's management team will
remain in place with Miguel Martin
continuing on as President of Aurora USA, and joining the Executive Leadership Team
of Aurora, reflecting his commitment and belief in the future
success of the combined company
- Reliva's culture is deeply rooted in operating in highly
regulated industries and producing and marketing products with high
degree of testing and compliance
- Creation of the Leading Global Cannabinoid Platform: The
combined company will have a leadership position in the global
medical and Canadian recreational cannabis markets along with a
leading market position in hemp-derived CBD in the U.S.
-
- CBD opportunity expected to be as large as US$24 billion at retail in 2025, according to the
Brightfield Group
- Reliva ranked #1 in topicals and #2 overall market share
according to IRI with product availability in over 20,000 retail
locations and via e-commerce
- Creates opportunity to leverage Reliva's leading U.S. brand
position into international markets
- Only CBD company in the three largest U.S. wholesale
distributors
- Contracts with leading retailers including 8 of the top 20
national convenience store chains
- Positions Reliva at the forefront of the growing sports
category supporting Aurora's UFC partnership
-
- Marketing assets afforded to Aurora through the UFC partnership
may eventually support awareness of Aurora/Reliva CBD products
- Combines Aurora's best-in-class scientific and product
innovation expertise with Reliva's nation-wide distribution
footprint and speed to market experience:
-
- Portfolio of high quality, rigorously tested and compliant
hemp-derived CBD product formats
- Leverage Aurora's existing scientific expertise to further
advance cannabinoid product innovation
Advisors
Cowen served as exclusive financial advisor and Paul, Weiss,
Rifkind, Wharton & Garrison LLP acted as legal counsel to
Aurora. Saul Ewing Arnstein &
Lehr LLP acted as legal counsel to Reliva.
About Aurora
Aurora is a global leader in the cannabis industry serving both
the medical and consumer markets. Headquartered in Edmonton, Alberta, Aurora is a pioneer in
global cannabis dedicated to helping people improve their lives.
The Company's brand portfolio includes Aurora, Aurora Drift, San
Rafael '71, Daily Special, AltaVie, MedReleaf, CanniMed, Whistler,
and ROAR Sports. Providing customers with innovative, high-quality
cannabis products, Aurora's brands continue to break through as
industry leaders in the medical, performance, wellness and
recreational markets wherever they are launched. For more
information, please visit our website at www.auroramj.com.
Aurora's Common Shares trade on the TSX and NYSE under the
symbol "ACB", and is a constituent of the S&P/TSX Composite
Index.
About Reliva
Reliva is a leader in delivering high quality hemp-derived CBD
products to consumers. Built on a philosophy of compliance,
testing, product innovation and approachable price points Reliva
has grown to become one of the largest retail CBD brands in the
U.S. Supported through long-term partnerships with leading national
wholesalers and retailers Reliva's products can be found in over
20,000 retail stores. Reliva's management team, which has decades
of regulated product experience, is uniquely positioned to manage
this dynamic and rapidly growing category. For more information,
please visit our website at www.relivacbd.com.
Forward Looking Statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable
securities law ("forward-looking statements").
Forward-looking statements are frequently characterized by words
such as "plan", "continue", "expect", "project", "intend",
"believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain
events or conditions "may" or "will" occur. These forward-looking
statements are only predictions. Various assumptions were used in
drawing the conclusions or making the projections contained in the
forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions, estimates and
assumptions of management in light of management's experience and
perception of historical trends, current conditions and expected
developments at the date the statements are made, such as current
and future market conditions, the current and future regulatory
environment and future approvals and permits. Forward-looking
statements are subject to a variety of risks, uncertainties and
other factors that management believes to be relevant and
reasonable in the circumstances could cause actual events, results,
level of activity, performance, prospects, opportunities or
achievements to differ materially from those projected in the
forward-looking statements, including the risks associated with:
entering the U.S. market, the ability to realize the anticipated
benefits associated with the acquisition of Reliva, achievement of
Aurora's business transformation plan, general business and
economic conditions, changes in laws and regulations, product
demand, changes in prices of required commodities, competition, the
effects of and responses to the COVID-19 pandemic and other risks,
uncertainties and factors set out under the heading "Risk Factors"
in the Company's annual information form dated September 10, 2019 (the "AIF") and filed
with Canadian securities regulators available on the Company's
issuer profile on SEDAR at www.sedar.com and filed with and
available on the SEC's website at www.sec.gov. The Company cautions
that the list of risks, uncertainties and other factors described
in the AIF is not exhaustive and other factors could also adversely
affect its results. Readers are urged to consider the risks,
uncertainties and assumptions carefully in evaluating the
forward-looking statements and are cautioned not to place undue
reliance on such information. The Company is under no obligation,
and expressly disclaims any intention or obligation, to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as expressly
required by applicable securities law.
The Company uses financial measures regarding itself, such as
Adjusted EBITDA, that do not have standardized meaning under the
International Financial Reporting Standards ("IFRS") and may
not be comparable to similar measures presented by other entities
("non-IFRS measures"). Further information relating to
non-IFRS measures, is set out in the Company's management
discussion and analysis for the three and six months ended
December 31, 2019 and 2018 under the
heading "Cautionary Statement Regarding Non-GAAP Performance
Measures" and the "Revenue" section for reconciliation to the IFRS
equivalent.
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SOURCE Aurora Cannabis Inc.