Aurora Cannabis Inc. and ICC Labs Inc. (ICC) have entered into a definitive arrangement agreement pursuant to which Aurora intends to acquire all of the issued and outstanding common shares of ICC for $1.95 per share, reflecting an aggregate purchase price of approximately $290 million. The Transaction has been unanimously approved by the Board of Directors of each ICC and Aurora.
Led by CEO Alejandro Antalich, a widely-recognized leader in the South American cannabis market with over 25 years of experience in the pharmaceutical sector, the acquisition of ICC will establish Aurora as the industry leader in South America, a continent with over 420 million people. ICC presently has over 70% market share in Uruguay, the first country in the world to legalize cannabis for adult consumer use. In addition, ICC holds licenses in Colombia for the production of medical cannabis.
The Transaction, once approved, creates a strong foundation for expansion, and will leverage ICC’s first mover advantage in South America, bringing significant low-cost production capacity, a well-diversified product portfolio, and extensive distribution channels throughout South America and internationally.
ICC brings Aurora, among other strategic synergies, the following:
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 nearing completion to bring the estimated production capacity to over 450,000 kg per annum, adding significant value to Aurora’s funded footprint:
- Two greenhouse facilities: currently operational – approximately 92,000 square feet
- Three outdoor grow sites, with a potential total area of over 800 acres, 590 acres of which are in Uruguay and which are being prepared for cultivation start later this calendar year
- Two facilities currently under construction, adding 124,000 square feet of greenhouse production in Colombiaand a 1,000,000 sq ft facility in Uruguay
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, positions the companies 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, including a presales agreement to export product to Mexico, a market with over 125 million people.
- Significant Extraction Capacity: ICC is progressing well towards the completion of a state-of-the-art large-scale extraction facility with capacity to process 150,000 kg of CBD feed per annum. Phase I of the facility is anticipated to be completed in October 2018, with the full facility online and operational by late 2018.
- 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, exempting facility exports from any applicable local tax on exports and imports.
Science, High-margin Products and Strong Genetics
- The First South American GMP Compliant Science Lab: ICC is close to completing South America’s first state-of-the-art cannabis science laboratory, designed to the highest international standards and in compliance with applicable GMP standards. Soon to be certified, the facility will provide an early mover advantage over other producers in South America. to drive sales to international cannabis markets.
- Product Diversification: ICC are leaders in South America, offering a broad portfolio of dried flower and higher margin products, including tablets, softcaps, ointments, creams, drops, infused syrups, and patches.
- Genetics: ICC have secured a portfolio of high CBD strains that are exclusive to ICC in South America, and are highly sought after.
Anticipated benefits for ICC shareholders
In addition to the benefits described above, related to the combined entity, ICC shareholders will receive the following additional benefits:
- Premium: The Share Consideration represents a premium of approximately 34% on the 20 day volume-weighted average trading price of ICC Shares on the TSX-V for the period ending August 22, 2018, the last trading day prior to ICC issuing a news release in respect of a media report speculating as to a potential transaction involving the acquisition of ICC.
- Liquidity: Aurora Shares are listed and posted for trading on the TSX, providing ICC shareholders with potentially greater liquidity.
- Aurora Shares: ICC shareholders, who will represent approximately 3.6% of outstanding Aurora Shares after giving effect to the Transaction, will have the opportunity to participate in the future potential increase in the value of Aurora, one of the world’s largest vertically integrated cannabis companies with a well-developed international footprint across five continents.