One of the biggest public companies in the cannabis sector in Canada, Aurora Cannabis Inc. (TSX: ACB) (OTCQX: ACBFF), announced a C$1.23-billion-dollar transaction, in cash and stock, to acquire CanniMed Inc. (TMX: CMED). This marks one of the largest deals ever made in the public or private cannabis and industrial hemp sectors.
The anticipated legalization of cannabis and extracted of cannabinoids from industrial hemp in Canada this year has caused the stock price of hemp and cannabis based public companies to soar. This acquisition is a direct sign that public companies are seeking to consolidate and monopolize the market in Canada ahead of legalization
After the announcement CanniMed’s stock price rose almost 25% to close at C$41.90 whereas Aurora’s stock price fell 5% to end at C$13.98. Both stocks over the past 3 months have risen on an average of 325%.
CanniMed has now stopped its pursuit of acquisition target Newstrike Resources Ltd (OTC: NWKRF) due to this deal. This resulted in Newstrike’s stock to plumet almost 20% to end at C$1.47.
This deal is still awaiting regulatory and shareholder approval.