Aurora Cannabis Inc. (NASDAQ: ACB) (TSX: ACB) has sold its Aurora Sun facility located in Medicine Hat, Alberta to one of the largest suppliers of propagated vegetables and ornamental plants in North America Bevo Farms.
The deal –which closed on Friday– was announced on Monday and is expected to provide incremental revenue and cash flow for Aurora. Bevo Farms is a wholly-owned subsidiary of Bevo Agtech Inc. and a company in which Aurora has a controlling interest.
The sale could result in up to $15 million payable over time by Bevo Farms to Aurora, contingent on Bevo Farms achieving certain financial milestones at the Aurora Sun Facility. The transaction is expected to also benefit Bevo’s business expansion plans.
“I am pleased that this transaction will achieve the dual objectives of improving Aurora’s cash flow, while benefitting Bevo as they proceed with the expansion of their business,” said Aurora’s CEO Miguel Martin.
“Bevo has successfully repurposed the Aurora Sky facility in Edmonton, and we’re excited to further support their continued growth. Bevo’s acquisition of the Aurora Sun facility further demonstrates the close synergies between our companies and the value that our partnership creates for shareholders.”
The key points of the strategy show that Bevo’s plans to make more money will be fully included in Aurora’s financial results because Aurora owns a major part of Bevo. This plan is based on Bevo’s management team’s long history of successful growth and a combined 85 years of farming experience.
Aurora’s stock dropped by 1.49 per cent on Monday to $0.66 on the Toronto Securities Exchange.
The company plans to grow more vegetables and flowers, which will allow the company to reach more customers. Also, it expects to save around $2 million each year by not having to maintain the unused Aurora Sun Facility.
“Bevo’s ability to deliver propagated plants directly from Medicine Hat to the Alberta greenhouse industry and beyond, delivers a win for the Alberta greenhouse industry, the City of Medicine Hat and its residents, for Bevo, and for Aurora,” Bevo’s CEO Leo Benne said.
“We would like to express our gratitude to the City of Medicine Hat for their essential contributions to this transaction. We look forward to further developing our partnerships in Alberta in the years to come.”
In recent years, Aurora has closed multiple facilities including the Aurora Polaris facility in Edmonton, two facilities in Denmark and multiple facilities in Saskatechan, Alberta, Ontario and Quebec.
The company reported a loss of $87 million for the last quarter ended March 31.