Aurora Cannabis to Acquire Remaining Interest in Hempco Food and Fiber Inc.

Published: April 17, 2019

Aurora Cannabis to Acquire Remaining Interest in Hempco Food and Fiber Inc.

Aurora Cannabis Inc. and Hempco Food and Fiber Inc. have entered into a binding letter agreement in regard to the basic terms and conditions upon which Aurora will acquire all of the issued and outstanding common shares of Hempco not already owned by Aurora. In consideration of the transaction, Aurora has agreed to pay $1.04 per Hempco Share, payable in common shares of Aurora, reflecting a valuation of approximately C$63.4 million on a fully diluted basis.

For more than 12 years Hempco has been a trusted and respected pioneer, innovator and provider of quality, hemp-based foods, hemp fiber and hemp nutraceuticals. Hempco produces and markets the brands PLANET HEMP™ and PRAISE, hemp-based foods and nutritional supplements for people and animals. Hempco has developed multiple international distribution channels, selling through highly visible platforms, such as Amazon.com, Well.ca and Metro Inc. Through its combined hemp assets, Aurora is well positioned to drive growth through the sale of hemp products to more than 100 countries around the globe.

Hempco is in the process of commissioning production at its new, state-of-the-art Nisku facility, a 56,000 square foot, 2.9 million kg per year hemp processing facility. The Nisku facility adds further processing capacity, while at the same time enabling the company to expand its product portfolio across different industry verticals.

Hempco provides Aurora with low-cost, high-volume access to raw material (hemp) for the extraction of CBD, which has been increasingly recognized for its therapeutic benefits across a wide range of medical indications and wellness applications. Aurora identified this potential early on, completing its first investment in Hempco in 2017, and has subsequently expanded its hemp-based infrastructure through the acquisitions of Agropro, Europe’s largest producer of organic hemp and hemp-based products, Borela and ICC Labs. The full integration of Hempco into this infrastructure adds further capacity, brands and distribution channels to capitalize on the global CBD wellness opportunity, which is anticipated to grow to $22 billion by 20221.

Furthermore, Hempco delivers additional differentiation in the industrial hemp market, with a range of hemp and hemp-based derivative products. These products fuel a global market that offers more sustainable alternatives in production and processing for the textiles, agriculture and agri-food and nutraceutical industries. The industrial hemp market is expected to reach US $10.6 billion by 20252.

With Aurora’s growing portfolio of hemp-focused brands and commitment to innovation in product development and industry research, the company’s acquisition of Hempco Shares is leveraging its substantial early mover advantage to meet and lead response to global demand for both hemp and CBD products.

“This transaction will enable us to fully integrate Hempco and its new Nisku processing facility into Aurora’s global hemp operations including Agropro, Borela and ICC,” said Terry Booth, CEO of Aurora. “Our goal is to strengthen our CBD-from-hemp supply chain as well as our hemp business of hemp-based superfoods, nutraceuticals and fibers. With vertical integration, product innovation expertise, and global reach, we are well positioned to extend our market share in these potential multibillion-dollar industries. We look forward to executing with the Hempco team on our global hemp and CBD strategy, and we invite the Hempco shareholders to join us on this exciting journey.”

Joel Watson, Chairman of Hempco, added, “The assets, capabilities, networks and resources that Aurora can mobilize to drive and accelerate growth once Hempco is fully integrated will, we believe, result in significant long-term value for Hempco shareholders, and consequently our board recommends this transaction be approved at our upcoming special meeting.”

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