Aurora Cannabis Inc (TSX:ACB) is in full on acquisition mode as it was announced on Tuesday that the company would be acquiring Anandia Laboratories in an all-stock deal for approximately $115 million. Anandia is based out of Vancouver and in January it was recognized as the Top Cannabis Testing Lab in the country.
Aurora is continuing to build on its capabilities in the industry as it looks to position itself as the top pot stock in the country ahead of legalization. While this deal pales in comparison to the $3.2 billion purchase the company made earlier this year of MedReleaf Corp (TSX:LEAF), it’s another sign of the company’s aggressiveness in the industry.
Aurora investors may not be pleased to learn that the company is yet again issuing more shares to fund another big purchase, but the sad reality is that we’re likely to see more of these all-stock deals given the fragmentation in the industry that still exists and the lack of cash that many pot stocks possess.
One of the biggest challenges that new pot stocks will face is how to build brand recognition and customer loyalty in an industry where advertising will be nearly impossible. And that gives big producers like Aurora and Canopy Growth Corp (TSX:WEED)(NYSE:CGC) a big advantage over new entrants, and suggests that more acquisitions are likely on the way.
Canopy Growth, however, has been reluctant to make any big acquisitions and it has openly questioned some of the recent purchases that it has seen, suggesting that valuations are likely too high for its taste.
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