Canadian Licensed Producer and the country’s number two cannabis company Aurora Cannabis (TSX:ACB) expects to list their shares on a major U.S. exchange by October according to a report out in the Financial Post today. Cam Battley, Aurora’s chief corporate officer, told the Post that the company sees the move as an opportunity to widen the net around possible investors.
“We’re targeting the month of October to establish a U.S. listing,” Battley said in an exclusive interview with the Financial Post on Tuesday. According to him, Aurora is looking at “U.S. institutional investors, not all of whom are able to trade in OTC-listed securities.”
Rumors have swirled around the company ever since Cronos Group (NASDAQ:CRON) uplisted to the Nasdaq, and Canopy Growth Corp. (TSX:WEED) (NYSE:CGC) moved to the New York Stock Exchange earlier this year. In March, CEO Terry Booth hinted at the possibility in an interview with Bloomberg, stating that the company was open to either exchange.
The news follows Monday’s leak that the company was in talks with Coca-Cola (NYSE:KO) to develop new cannabis-derived beverages. Though the iconic beverage brand denied the rumors, Aurora’s stock prices jumped, as investors hoped to be a part of the next Constellation Brands deal. In August, Constellation Brands, makers of, among other things, Robert Mondavi wine, invested $4 billion into Canopy Growth Corporation.
New investors would help pay for recent acquisitions
A move to the New York Stock Exchange or the Nasdaq is always beneficial, but would be so especially at this time for Aurora, as the company has spent a considerable amount of money acquiring smaller firms to expand. Earlier this year Aurora acquired rival MedReleaf for CAD$3.2 billion, and before that, they had a long, protracted battle to takeover CanniMed Therapeutics.
More recently, the company bought out ICC Labs Inc. (TSX-V:ICC), a South American company with over 70 percent market share in Uruguay. They also hold a license to produce medical cannabis in Colombia. The total cost of that acquisition was $290 million.
"ICC is an ideal partner for Aurora to establish leadership in the South American cannabis market, delivering clear first mover advantage on a continent with over 420 million people," said Terry Booth, CEO of Aurora in a statement. "ICC and its management team have shown exceptional vision and execution across production, expansion, distribution and product development. The company has a very strong management team with deep connections throughout the continent, which we believe will facilitate successful expansion into all South American markets."
Concerns of dilution on the horizon
While being so aggressive makes for great headlines, marijuana stock investors have begun to worry about stock dilution at Aurora. It’s a valid concern that remains to be seen as the market plays out. As Profit Confidential noted recently if the company’s acquisitions bear fruit —that is if they are at or below market value, then any dilution will likely be offset by a bump in share price. Smart investors will have to wait and play the long game.
More on this story as it breaks...