Why Aurora Cannabis Stock Is Skyrocketing Today

Marco Green
May 23, 2020

The analyst views the Reliva deal as one likely to boost EBITDA and said it's reasonably priced compared with other deals, "as long as it does not distract from progress in the Canadian and European cannabis markets".

"We have taken the time necessary to carefully assess the company's entry into the USA 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", said Aurora Cannabis interim chief executive officer Michael Singer in a statement. "But in a growth industry, we also judge companies based on the platforms they are building for future growth", said the note. "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".

"This is instant access to the world's largest CBD market", Michael Singer, Aurora's Executive Chairman and Interim CEO, told CNBC. "Certainly, the consumer CBD industry faces temporary challenges in the United States, but the industry has long-term upside, valuations have pulled back, and we think Reliva has a unique channel and price positioning that allowed it to perform quite well pre-COVID", Zuanic wrote.

"We plan to capitalize on each company's market leadership and sales infrastructure to drive higher revenue growth than either company could independently accomplish".

Aurora said it will pay US$40 million in stock to buy Reliva, plus up to US$45 million in cash or stock depending on whether certain financial targets are hit.

Focus on regulatory, testing and compliance protocols.

Aurora says it was attracted to Reliva because of its management team's experience selling and marketing regulated consumer packaged goods, its relationships with critical trade partners that provide a US national distribution footprint and its financial discipline.

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