Published: Fri, March 15, 2019
Economy | By

Aurora Cannabis shares higher after Peltz comes aboard

Aurora Cannabis shares higher after Peltz comes aboard

Aurora Cannabis shares saw an uptick following news that it has appointed USA billionaire Nelson Peltz as a strategic adviser and given him the option to buy a stake in the company. He was previously a director at the food companies H.J. Heinz and Mondelez International and was also chairman and CEO of Triarc Companies, which owned Arby's and Snapple, as well as other consumer and industrial businesses. He will join Aurora Cannabis as a strategic adviser, working with the company to "explore potential partnerships" and help with the company's global expansion strategy, according to a press release.

Peltz is co-founder of New York-based multibillion-dollar asset management firm Trian Fund Management.

The deal does not involve Peltz joining Aurora's board.

Peltz has been offered the option to buy about 20 million shares of Aurora at $10.34 a share.

While Coke didn't confirm or deny that it had been in talks with Aurora, the company said it was "closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages".

Including Wednesday's gains, Aurora's USA -listed shares have surged more than 68 percent this year.

Aurora, based in Edmonton, Alberta, hasn't yet secured a major strategic partner along the lines of Constellation Brands Inc.'s investment in Canopy Growth Corp. or Altria Group Inc.'s deal with Cronos Group Inc.

"Canadian licensed producers, and Aurora in particular, are well positioned to lead in the development of the worldwide cannabis industry", Peltz said in a statement.

"We believe he could be instrumental in facilitating discussions with large (consumer packaged goods) companies", GMP Securities analyst Martin Landry wrote in a note to investors. Cowen analyst Vivien Azer shared that optimism.

"In addition, we think (Aurora) will be more patient in partnership selection than its peers, particularly regarding equity investment".

This equates to a almost 2 percent stake in the company, which would be vested every quarter over a four-year period, Aurora said. Those events include the consummation of certain transactions and the closing price of Aurora's common shares being at least $31.02 and additionally $41.36 for a specified number of trading days.

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