May 22, 2020
Aurora Cannabis Enters US Market With Acquisition Of Reliva

Aurora Cannabis Inc., a Canadian producer of medical and consumer cannabis, and Reliva, LLC, a leader in the sale of hemp-derived CBD products in the United States, have entered into an agreement pursuant to which Aurora will acquire all of the issued and outstanding membership interests of Reliva.

Under the terms of the agreement, members of Reliva will receive approximately US$40 million of Aurora common shares. The transaction also includes a potential earn-out of up to a maximum of US$45 million payable in Aurora shares, cash or a combination thereof, over the next two years contingent upon Reliva achieving certain financial targets. The structure of the earn-out is designed to align risk and reward between Aurora shareholders and Reliva management to focus on continued strong operational and financial execution. The transaction is expected to close, subject to customary closing conditions, in June 2020. It is anticipated that the transaction will be immediately accretive to Aurora on an Adjusted EBITDA basis, consistent with Aurora’s objective to drive towards Adjusted EBITDA profitability in its fiscal first quarter of 2021.

The transaction will combine Aurora’s leading Canadian recreational brands, and Canadian and European medical market position with the leading U.S. hemp-derived CBD brand in retail stores. The transaction represents the culmination of a multi-month strategic evaluation of the U.S. hemp-derived CBD industry. Reliva stood out among a lengthy list of potential partners for its: (1) focus on regulatory, testing and compliance protocols; (2) proven management team with extensive experience selling and marketing regulated consumer packaged goods; (3) deep relationships with critical trade partners that provide a U.S. national distribution footprint; and (4) financial discipline and track record of growth and profitability. Together with Reliva, Aurora is expected to be positioned as a meaningful player in the United States, the world’s largest cannabinoid market.

The transaction will create a large and diversified pure-play international cannabinoid company, combining Aurora’s scientific and product innovation expertise with Reliva’s nation-wide distribution footprint and speed to market experience.

The combined company will have a leadership position in the global medical and Canadian recreational cannabis markets along with a leading market position in hemp-derived CBD in the U.S.

  • CBD opportunity expected to be as large as US$24 billion at retail in 2025, according to the Brightfield Group
  • Reliva ranked #1 in topicals and #2 overall market share according to IRI with product availability in over 20,000 retail locations and via e-commerce
  • Creates opportunity to leverage Reliva’s leading U.S. brand position into international markets
  • Only CBD company in the three largest U.S. wholesale distributors
  • Contracts with leading retailers including 8 of the top 20 national convenience store chains
  • Positions Reliva at the forefront of the growing sports category supporting Aurora’s UFC partnership
    • Marketing assets afforded to Aurora through the UFC partnership may eventually support awareness of Aurora/Reliva CBD products

Cowen served as exclusive financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal counsel to Aurora. Saul Ewing Arnstein & Lehr LLP acted as legal counsel to Reliva.

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