Cannabis producer Aphria signs deal to buy Nuuvera Inc., looks to expand internationally
Aphria looks to expand its footprint internationally through the company
Licensed marijuana producer Aphria Inc. has signed an agreement to buy medical cannabis firm Nuuvera Inc. in a cash-and-stock deal that it says values the company at $826 million.
The deal builds on a partnership between the companies as it combines Aphria's production with Nuuvera's expertise in cannabis processing and extraction.
Aphria CEO Vic Neufeld said the combination will also help the company grow its international footprint in Germany, Italy, Spain, the United Kingdom, Malta, Israel, Lesotho and Uruguay on top of their existing deals in Australia.
"Aphria is continuously looking for new revenue streams and opportunities to bring Aphria-branded medical cannabis to patients across Canada and in markets around the world," explained Neufeld, during an investors conference call on Monday.
The CEO outlined how the combination of companies will open the door to "key international markets," most notably in Germany and Italy.
"Italy is a market that is expected to be $9 billion larger than recreational and medical in Canada combined," said Lorne Abony, CEO of Nuuvera. "The Italian market has been provided almost entirely by import and almost entirely by one company in the Netherlands."
Abony said the partnership between the two companies will provide a "limitless supply" of cannabis products to the country, that will help grow the market there.
"I think that is a good example of one of the combined effects that you'll see from the Nuuvera-Aphria combination globally," he added.
Under the terms of the deal, Nuuvera shareholders will receive $1 in cash plus 0.3546 of an Aphria share for each share they hold.
Based on Aphria's 10-day volume weighted average price of $21.15, the offer is worth $8.50 per share.
Nuuvera shares closed at $7 on Friday, while Aphria shares finished last week at $20.16.
The transaction is subject to customary closing conditions including approval by Nuuvera shareholders.
Assuming Aphria closes its acquisition of Broken Coast Cannabis Inc. that it also agreed to buy using stock and cash, Nuuvera shareholders will own approximately 14.8 per cent of the combined company.
With files from the Canadian Press.