Aurora Cannabis to buy up all of processor Hempco

Hemp food firm setting up new plant near Edmonton

hemp smoothie
A "hemp and greens morning machine" smoothie using Planet Hemp smoothie mix and hemp milk. (PlanetHempSuperfood.ca)

Edmonton cannabis company Aurora Cannabis is set to buy up the balance it doesn’t already own in hemp processing firm Hempco Food and Fiber.

Aurora announced Tuesday it will pay $1.04 a share for the remaining shares of Vancouver-based Hempco, which makes and sells Planet Hemp hemp-based foods and Praise hemp-based supplements for dogs and horses. Hempco is also now commissioning a new processing plant at Nisku, just south of Edmonton.

Aurora bought a minority stake of just under 20 per cent of Hempco in mid-2017 and exercised an option in May last year to raise that stake to just over 50 per cent. Its offer for full ownership of Hempco values the company at about $63.4 million.

Since investing in Hempco, Aurora has had “low-cost, high-volume access to raw material,” through Hempco’s hemp supplies, for extraction of cannabidiol (CBD), the company said.

CBD can be extracted from industrial hemp and marijuana plants alike, and while it’s sought for medicinal use in oils and edibles, it doesn’t have the psychoactive effects of the THC found in marijuana.

Bringing Hempco’s assets into the CBD processing infrastructure Aurora already owns “adds further capacity, brands and distribution channels to capitalize on the global CBD wellness opportunity, which is anticipated to grow to $22 billion by 2022,” Aurora said.

Hempco’s Nisku facility, which will be able to process up to 2.9 million kg of hemp per year, “adds further processing capacity, while at the same time enabling the company to expand its product portfolio across different industry verticals,” Aurora said.

Hempco’s fibre processing operations will bring Aurora “additional differentiation in the industrial hemp market,” offering hemp-based alternatives in production and processing for the textiles, agri-food and nutraceutical sectors, Aurora said, noting the industrial hemp market is expected to reach US$10.6 billion by 2025.

“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,” Hempco chairman Joel Watson said in Aurora’s release.

Hempco’s board plans to recommend voting in favour of the deal at an upcoming special meeting of shareholders, Watson said. Pending regulatory and court approvals, Aurora said it expects to close the deal in the second quarter of this year.

Hempco would then become a wholly-owned Aurora subsidiary and would be delisted from the TSX Venture Exchange, Aurora said. –– Glacier FarmMedia Network

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