A consolidation wave is sweeping across the marijuana industry, as companies aim to improve their competitive positioning and market share in an industry which offers a lot a promise.
Aurora Cannabis Inc. (ACBFF) recently announced a deal to buy MedReleaf Corp. (MEDFF) in an all-cash transaction valued at C$3.2 billion.
Aphria Inc. (APHQF) announced a deal in January to acquire Nuuvera, which works with partners in Germany, Italy and Israel, for C$826 million in cash and stock. Aphria also bought Vancouver Island-based cannabis producer Coast Cannabis for C$230 million in cash and stock earlier this year.
In an interesting turn, Constellation Brands Inc. (STZ) announced last October its intention to pick up a minority stake in Canopy Growth for C$245 million.
M&A activity has perked up in the space in the last couple of years following the widespread legalizing of medical marijuana. To top it, Canada is poised to make the selling of recreational marijuana legal this year.
Sales of recreational marijuana may fetch Canada $5 billion per year to start with, according to estimates by Deloitte. This number goes up to $8.7 billion, if people who are likely to consume are also accounted.
Four Potential Targets
Maricann Group Inc. (MRRCF): Maricann Group, which recently picked up Malta's Medican Holdings, a licensed operator, has been discussed as a takeout target for quiet some time now. A March 19 article in Deep Dive pointed to comments by CEO Ben Ward about a potential interest by an undisclosed party, and the appointment of M&A lawyer Clay Horner as counsel to the special committee of Maricann. The company recently announced a foray into the European market through its deal to buy Haxxon AG, a producer of feminized high CBD cannabis plants. In late December, it stitched up a deal to supply cannabis to Canadian pharmacy chain Lovell Drugs.
Emblem Corp. (EMMBF): Licensed Canadian marijuana producer Emblem that focuses on edible oil and smokeless products could be a viable acquisition target, according to Technical420.com. The reason? Attractive valuation and focus on expansion and cannabis oil.
OrganiGram Holdings Inc. (OGRMF): The company's recently reported Q1 results showed a record revenue of C$2.4 million and the recent cultivation license expansion it received from Health Canada, which triples its production to 16,000 kg per annum.
Hiku Brands Company Ltd. (DJACF): The vertically integrated company formed following the merger of DOJA Cannabis Company and Tokyo Smoke has been on a bulking up spree. It recently announced an agreement to buy WeedMD. There have been whispers that Hiku is also being sought out.