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Thursday, Oct 6, 2022
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.

Business

Aurora acquires one of the largest North American vegetable producers

Bevo propagates tomatoes, peppers, cucumbers and other plants such as bedding plants, flowers and grasses

Aurora acquires one of the largest North American vegetable producer
Photo via Aurora

Aurora Cannabis Inc. (NASDAQ: ACB) (TSX: ACB) has acquired a “controlling interest” in Bevo Agtech Inc., one of the largest suppliers of vegetables and plants in North America.

On Thursday, the Canadian cannabis producer announced the agreement were –through its subsidiary– Aurora will acquire 50.1 per cent of Bevo’s outstanding common shares, take control of its board of directors and financially consolidate it.

Once the transaction is closed, Bevo will acquire Aurora’s Sky facility in Edmonton, Alberta through the acquisition of Aurora’s wholly-owned subsidiaries and the facility will be used for orchid and vegetable propagation.

Through its subsidiary, Aurora will pay $45 million in cash and up to an additional $12 million to be paid to the Bevo selling shareholders over the next three years after closing if certain financial milestones at its Site One facility in Langley are reached.

Bevo will pay up to $25 million for the Aurora Sky facility depending if Bevo successfully achieves certain milestones at the facility.

Bevo was founded in 1986 and operates 63 acres of greenhouse facilities on 98 acres of land in Langley, British Columbia with 50 acres of land in Aldergrove and 20 acres of land in Pitt Meadows, BC.

It propagates tomatoes, peppers, cucumbers and other plants such as bedding plants, flowers and grasses.

For the twelve months ended June this year, Bevo has achieved revenues of $39 million and an adjusted EBITDA of $9 million.

Read more: Aurora receives EU-GMP certification for its German facility

Read more: Aurora dips Q3 revenue by 17% to $50.4M, shuts down Aurora Sky facility

“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,” Aurora CEO Miguel Martin said in a statement.

“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,” he added.

Martin expects the investment will drive significant shareholder value and the repurposing of the company’s Aurora Sky facility will save significant costs that come with the winddown and sale of the facility.

The transaction received financial advice from the firm Lazard Canada Inc. and Stikeman Elliott LLP acted as legal counsel to Aurora.

For Bevo, Agentis Capital Advisors was the financial advisor and Fasken Martineau DuMoulin LLP was its legal counsel.

Company stock went up by 5 per cent on Thursday to $2.12 on the Toronto Securities Exchange.

 

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