Aurora Cannabis Receives Final Regulatory Approval and Completes Acquisition of ICC Labs

Published: November 22, 2018

Aurora Cannabis Receives Final Regulatory Approval and Completes Acquisition of ICC Labs

Aurora Cannabis Inc. and ICC Labs Inc. are pleased to announce today the completion of the previously announced plan of arrangement pursuant to which Aurora has acquired all of the issued and outstanding common shares of ICC for $1.95 per share (payable in common shares of Aurora), reflecting an aggregate purchase price of approximately $290 million. ICC is now a wholly-owned subsidiary of Aurora. Completion of the Arrangement follows receipt of approval of the Arrangement from the Instituto de Regulación y Control del Cannabis, the Uruguayan regulatory authority overseeing the regulation and control of cannabis in Uruguay.

ICC’s common shares will be delisted from the TSX Venture Exchange (the “TSX-V”), subject to TSX-V approval, and applications will be made for ICC to cease being a reporting issuer.

The acquisition of ICC establishes Aurora as the industry leader in Latin American, a region which encompasses more than 650 million people from across Mexico, the CaribbeanCentral America, and South America. ICC, based in Uruguay, the first country in the world to legalize cannabis for adult consumer use, has developed a strong portfolio of high-quality, low-cost production assets, product offerings, and commercial agreements. Located in Uruguay’s free trade zone, ICC’s state-of-the-art science and GMP compliant processing facility, the first of its kind in Latin America, brings very significant capacity and early mover advantage to build significant market share both in Latin America and the international cannabis and wellness markets.

Management Commentary

“This transaction combines two pioneering cannabis companies with fully aligned international growth ambitions, immediately positioning Aurora as the market leader in Latin America, an area with well over 650 million people,” said Terry Booth, CEO of Aurora. “Not only does ICC have substantial low cost, high-quality production capacity, it is the first company in Latin America which has completed a GMP compliant extraction facility, which will play an important role in supplying higher-margin CBD-based products for the global cannabis and wellness markets. Together, ICC and Aurora will accelerate the development of our well-diversified product portfolio, and extensive distribution channels to capitalize on the substantial opportunities in the global cannabis industry.”

Neil Belot, Chief Global Business Development Officer, added “Alejandro and his team have developed one of the deepest international networks Aurora has encountered. ICC has leveraged its early mover advantage in Uruguay to capitalize on significant growth opportunities in the broader Latin American cannabis markets. With world-class production, process facilities and distribution infrastructure in place, this transaction strengthens Aurora’s position as the global partner of choice in multiple international markets.”

Alejandro Antalich, CEO of ICC Labs added, “The complementary nature of our two organizations makes this transaction an ideal fit that will allow us both to realize our ambitious growth strategies. We’re excited to announce our upcoming official grand opening of the first state-of-the-art laboratory in Latin America on November 28th. This facility based in Uruguay is focused on the development of pharmaceutical grade products derived from cannabis and hemp. With our Latin American facilities coming online, as well as multiple supply and distribution agreements in large international markets in place, we believe that Aurora’s resources, innovation capabilities, and broad global distribution networks represent an ideal partner to accelerate our growth.”

ICC brings to Aurora, among other strategic synergies, the following competitive advantages.

Significant, Low-cost Capacity

  • Significant expansion of low-cost production and processing capacity: ICC is expanding rapidly, with both established facilities and a number of projects in various stages of completion that will bring the estimated production capacity of cannabis and hemp to over 450,000 kg per annum, adding significant value to Aurora’s funded footprint:
    • Two operational greenhouse facilities totaling approximately 92,000 square feet
    • Three outdoor grow sites, with a total potential area of over 800 acres, 590 acres of which are in Uruguay and which are being prepared for cultivation start later this calendar year
    • The Company is assessing integration and development synergies between ICC and its wholly owned subsidiary MED Colombia, including the construction of greenhouse and processing facilities, and is developing its plan for a 1,000,000 square foot greenhouse facility in Uruguay, and a similarly sized facility in Colombia.

Strong Foundation to Capitalize on the Significant Global CBD Wellness Market Opportunity

  • CBD Rich Production: Uruguay is the only country where regulations currently permit the cultivation of CBD-rich hemp on a commercial scale, allowing licensed producers to grow hemp with THC concentrations of up to 1%, providing a significant yield advantage over global competitors. ICC’s deep background in pharma and the ability to grow low-cost CBD-rich hemp at very large scale, position Aurora exceptionally well to capitalize on global opportunities in the high-growth CBD wellness market.
  • CBD Brand and Distribution: ICC recently launched its BIDIOL brand of CBD products, and is developing a broad international distribution network.
  • Significant Extraction Capacity: ICC has completed a state-of-the-art large-scale extraction facility with capacity to process 150,000 kg of CBD feed per annum.
  • Free Trade: ICC’s new CBD extraction facility is strategically located approximately five minutes from the Canelones international airport and within Uruguay’s “Science Park” free trade zone. This strategic location exempts all facility exports from any applicable local tax on exports and imports.

Science, High-margin Products and Strong Genetics

  • The First Latin American GMP Compliant Science Lab: ICC has completed Latin America’s first state-of-the-art cannabis science laboratory, designed to the highest international standards and in compliance with applicable GMP standards. In the process of being certified, the facility will provide an early mover advantage over other producers in Latin America to drive sales to international cannabis markets. The Company has received the required registration and government permits to commence operation of the facility.
  • Product Diversification: ICC offers a broad portfolio of dried flower and higher margin products, including tablets, softcaps, ointments, creams, drops, infused syrups, and patches. The Company is assessing pathways for potential import of products and IP into Canada.
  • Genetics: ICC has secured an exclusive portfolio of high CBD strains, including exclusivity in South America for CW2A-B, a high-profile CBD strain.

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