Aurora Cannabis has agreed to buy U.S.-based CBD company Reliva, giving the struggling Canadian company a business foothold in America.
Shares of Aurora closed off nearly 13% ahead of the Wednesday afternoon announcement. The stock surged higher in after-hours trading.
However, over the past 12 months, Aurora has lost nearly 90% of its stock market value as of Wednesday’s close.
“It’s immediate access into the world’s largest cannabinoid market,” Aurora Executive Chairman and interim CEO Michael Singer told CNBC’s Frank Holland. “I think the Reliva acquisition is a responsible strategic entry into the U.S. market; and for Aurora, delivers a key aspect of our reset plan.”
Reliva stakeholders will receive $40 million in Aurora shares, which had surged more than 120% since the company on May 14 reported a narrower quarter-over-quarter loss. The deal is expected to close next month.
In February, Terry Booth retired as CEO, and Aurora announced 500 layoffs and a write down of approximately $700 million in product and equipment.
Singer said the deal complements the near-term goal of Aurora reaching profitability in the next fiscal year and longer term goal of entering the U.S. market for CBD and cannabis. [Read more at CNBC]