Who’s Going To Marry Aurora Cannabis???
Altria Group, one of the largest tobacco companies in North America, invested 2.4 $1.8 billion in Ontario-based cannabis producer Cronos Group.
Anheuser-Busch InBev, the world’s largest brewer, partnered with Canadian pot producer Tilray Inc in a $100-million joint venture to research cannabis-infused non-alcoholic drinks.
Constellation Brands started dating Canopy Growth in October when they purchased a 9.9% equity stake in Canopy Growth for about $190 million. Then in June, Constellation Brands got engaged to Canopy Growth when they bought a third of the Canopy Growth's 600 million Canadian dollar convertible note offering aka debt, giving them the option to convert the notes into common stock. Then two weeks ago, Constellation Brands married Canopy Growth when they announced an additional $3.8 billion equity investment in Canopy Growth.
Aurora Cannabis Inc. produces and distributes medical cannabis products in Canada and internationally.
Aurora has several feathers in its proverbial cap as a cannabis investing vehicle. The company has one of the broadest international footprints, with operations in 24 countries, a top-tier production capacity that may exceed 700,000 kilograms per year at peak, 16 subsidiaries spanning the entirety of the cannabis value chain, as well as a range of strategic partnerships.
There were discussion of Coca-Cola courting Aurora Cannabis to develop weed-infused beverages back in 2018, but I courtship ended at the dinner table.
How can the largest producer of cannabis be without a partner? Which is why Aurora Cannabis has hired relationship expert, Nelson Peltz last week. Nelson Peltz will serve as a strategic advisor to help it explore potential partnerships.
Peltz is the founder and CEO of Trian Fund Management, a multibillion-dollar investment firm. Trian owns significant stakes in several big companies, including packaged-foods company Mondelez, consumer-goods giant Procter & Gamble, food-products wholesaler Sysco, and fast-food chain Wendy's.
With Peltz’s background and being incentived to find a partner for Aurora Cannabis (Aurora is granting him options to buy nearly 20 million shares at a price well below the current share price), I can guarantee you, Aurora Cannabis won’t be single for long. And when they do get married, expect a significant pop in the stock price, including all-time new highs.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
The are large enough to be able to fund their growth so they are smart in this approach as they can probably get better valuation down the road as the industry matures and their options expand.
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I think if they want to expand and keep up with the other players, a partner might be best at this point to help with distribution/ expansion.