Full Press Release Details
Aurora Cannabis Acquires Controlling Interest
Long Term Investment Expected
to Deliver Aurora Immediate Positive Cash Flow
Aurora acquires a controlling interest in Bevo; one of the
largest suppliers of propagated vegetables and ornamental plants in North America with proven track record of profitability
Bevo will continue to be run by existing management team; robust
growth plan includes use of Aurora Sky for ornamental plant cultivation and for vegetable propagation
Transaction is expected to be immediately accretive adding
~$9 million of LTM Adjusted EBITDA; Aurora remains on track to achieve consolidated positive Adjusted EBITDA run rate exiting the first
half of fiscal 2023.
EDMONTON, AB, Aug. 25, 2022 /CNW/ - Aurora Cannabis
Inc. (the "Company" or "Aurora") (NASDAQ: ACB) (TSX: ACB), the Canadian company defining the future
of cannabinoids worldwide, is pleased to announce today that a wholly-owned subsidiary of the Company has acquired a controlling interest
in Bevo Agtech Inc. ("Bevo"), the sole parent of Bevo Farms Ltd., one of the largest suppliers of propagated vegetables
and ornamental plants in North America (the "Bevo Transaction"). Concurrent with closing of the Bevo Transaction, Bevo
entered into an agreement to acquire the Company's Aurora Sky facility in Edmonton, Alberta through the acquisition
of one of Aurora's wholly-owned subsidiaries (the "Aurora Sky Transaction" and together with the Bevo Transaction, the
The Transaction allows Aurora to immediately benefit
from a profitable, cash flow positive and growing business, and may have the potential to drive long term value to Aurora's existing cannabis
business via the application of Bevo's industry leading plant propagation expertise. Aurora, through its wholly-owned subsidiary, will
acquire 50.1% of Bevo's outstanding common shares, take a controlling position on Bevo's board of directors and financially consolidate
Bevo. Bevo's experienced management team are to remain significant shareholders and stay in place to embark on a robust growth plan, including
the use of the Aurora Sky facility for orchid cultivation and vegetable propagation.
Founded in 1986, Bevo operates 63 acres of greenhouse
in British Columbia, Canada; is led by a management team with over 85 years of agricultural experience, and supplies greenhouses, nurseries,
field farms and wholesalers. Bevo has consistently demonstrated growth in revenue and earnings over the past decade through process improvements
and facility expansions. For the twelve months ended June 30, 2022, Bevo has achieved revenues of $39 million and Adjusted EBITDA of $9
million (excluding non-recurring rental revenue). Bevo's business exhibits seasonality driven by agricultural grow cycles, with the strongest
financial period being from January to June.
Management Commentary
"This investment once again demonstrates our
disciplined capital allocation approach and is consistent with both our short term needs and long-term vision to be the leading global
cannabis company. Bevo's track record in generating not only positive Adjusted EBITDA but free cash flow, world class propagation expertise,
and established distribution networks in Canada and the United States makes them an ideal strategic partner," said Miguel Martin,
Chief Executive Officer of Aurora. "We expect this investment and collaboration between industry leaders will drive significant shareholder
value and synergies for both parties. We are also excited about Bevo repurposing Aurora Sky and the potential to expand the scale and
scope of their business and saving significant costs previously expected in connection with the wind down and sale of the facility".
Leo Benne, President & CEO of Bevo, added, "Since
inception, Bevo has taken great pride in utilizing state-of-the-art technology to become a leading plant propagator in North America.
We are delighted to join forces with Aurora to pursue our high growth strategy, starting with our move into Alberta which allows us to
significantly expand Bevo's addressable market. We are incredibly happy that the Aurora team is committed to keeping all of our facilities
dedicated to our customer base, and to expanding our operations into Alberta through the addition of the Aurora Sky facility. It is clear
that the Aurora team is deeply aligned with our existing business plans and objectives for profitable growth, and we look forward to building
upon the strengths of Aurora as a sponsor to accelerate our business."
Supports Aurora's timeline
to profitability with positive and growing Adjusted EBITDA and free cash flow. The Transaction is aligned with Aurora's plan to
achieve Adjusted EBITDA profitability on a run-rate basis in the first half of fiscal 2023, as Bevo has consistently achieved positive
and growing Adjusted EBITDA for over 10 years.
Bevo's management team
is pursuing a high-growth business plan intended to scale Adjusted EBITDA from current levels, starting with conversion of the Aurora
Sky facility for non-cannabis agriculture. Repurposing of the Aurora Sky facility is expected to generate revenue and Adjusted
EBITDA with minimal capital investment needed to retrofit the facility, while saving on facility shutdown costs. This is expected to allow
Bevo to greatly increase its production capability, extend its shipping range, and access new regional greenhouse demand in Canada and
Bevo employs proprietary
and innovative processes and greenhouse technology designed to provide industry-leading efficiency. Ability to leverage Bevo's
propagation capabilities is expected to enhance Aurora's existing genetics licensing business (Occo) to create healthy clones for sale
and could potentially lead to large scale cannabis propagation across the industry.
Bevo's management team will retain substantial equity ownership
and partner with Aurora to drive profitable growth across both businesses. Bevo's existing management team, who have a proven
track record of achieving consistent revenue growth and driving EBITDA improvement through innovative agricultural processes, will remain
in place with significant equity ownership.
Aurora is purchasing its controlling interest in Bevo
from certain of Bevo's existing shareholders (the "Bevo Selling Shareholders"). Total cash consideration paid by a subsidiary
of Aurora on closing was approximately $45 million. Up to an additional $12 million shall be payable by a subsidiary of Aurora to the
Bevo Selling Shareholders over the three years following closing of the Bevo Transaction, conditional on Bevo successfully achieving certain
financial milestones at its Site One facility in Langley, which additional amounts may be satisfied, at Aurora's option, through the issuance
of Aurora common shares, subject to approval of the Toronto Stock Exchange.
Up to $25 million could be payable over time by Bevo
to Aurora in connection with the Aurora Sky Transaction, based on Bevo successfully achieving certain financial milestones at the Aurora
Sky Facility. Closing of the Aurora Sky Transaction is conditional upon receipt of certain third-party consents.
Lazard Canada Inc. acted as exclusive financial advisor
and Stikeman Elliott LLP acted as legal counsel to Aurora in connection with the Transaction.
Agentis Capital Advisors acted as exclusive financial
advisor and Fasken Martineau DuMoulin LLP acted as legal counsel to Bevo in connection with the Transaction.
About Aurora Cannabis
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 adult-use brand portfolio includes Aurora Drift, San Rafael '71, Daily Special, Whistler,
Being and Greybeard, as well as CBD brands, Reliva and KG7. Medical cannabis brands include MedReleaf, CanniMed, Aurora and Whistler Medical
Marijuana Co. Driven by science and innovation, and with a focus on high-quality cannabis products, Aurora's brands continue to break
through as industry leaders in the medical, performance, wellness and adult recreational markets wherever they are launched. Learn more
Aurora's common shares trade on the NASDAQ and TSX
under the symbol "ACB" and is a constituent of the S&P/TSX Composite Index.
Bevo is North America's leading supplier of propagated
agricultural plants, operating approximately 63 acres of greenhouse facilities on 98 acres of land in Langley, BC, 50 acres of land in
Aldergrove, BC, and 20 acres of land in Pitt Meadows, BC. Bevo's main products are the propagation of vegetable plants such as tomatoes,
peppers, cucumbers, and other plants such as bedding plants, flowers and grasses. Bevo markets its products to established greenhouse
growers, nurseries and retail outlets throughout North America.
Forward Looking Information
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.
Forward-looking statements made in this news release include statements regarding the Transaction, including, but not limited to: the
expected timing for closing of the Aurora Sky Transaction; the impact of the Transaction on the Company's premiumization strategy
and position in the Canadian recreational market; the impact of the Transaction on the Company's path to profitability and goal to achieve
Adjusted EBITDA profitability in the first half of fiscal 2023; the synergies, revenue, positive cash flow and positive Adjusted EBITDA
expected to be realized as a result of the Transaction; the expansion of the scale and scope of Bevo's business in connection
with the Aurora Sky Transaction and the potential for conditional additional consideration to be paid in connection with the Transactions.