Aurora Cannabis to acquire Farmacias Magistrales S.A.
Aurora Cannabis announced that the company has entered into a Letter of Intent to acquire all of the issued and outstanding shares of Farmacias Magistrales S.A., subject to customary due diligence provisions, the completion of definitive agreements, and regulatory and government approval. As previously announced, Farmacias recently became Mexico's first and only federally licensed importer to date of raw materials containing THC, gaining the necessary licenses, facilities, and permissions to import raw THC material, and manufacture, store, and distribute medical cannabis products containing over 1% THC. This transaction firmly establishes Aurora's first-mover advantage in one of the world's most populous countries, where more than 130 million people will have federally legal access to a range of Aurora's non-flower medical cannabis products containing THC. Under the regulations governing the Mexican medical cannabis market, domestic cultivation, import or sale in Mexico of dried flower products is prohibited. Consequently, Farmacias is the only company to date with the ability to supply THC containing products, and the only THC-containing offerings available initially will be Aurora-sourced higher-margin derivative products. Consideration to be paid for the acquisition of Farmacias will be in shares of Aurora and based on a valuation of the proforma distribution revenue projections of Farmacias. The consideration payable by Aurora also includes a contingent portion of up to 25% payable only upon the achievement of certain milestones over the next 12 months related to operational metrics, such as maintaining market share.