Aphria Inc. to Acquire Nuuvera Inc. for $826 Million

Aphria Inc. (TSX:APH) will acquire Nuuvera Inc. (TSXV:NUU) for approximately $8.50 per share in cash and stock. What should you do now?

What?

Global cannabis company Aphria Inc. (TSX:APH) announced on Monday morning that it has entered a definitive arrangement agreement to acquire 100% of the issued and outstanding shares of Nuuvera Inc. (TSXV:NUU), a cannabis company with a strong presence in Europe, Africa, and the Middle East, for approximately $826 million. Aphria’s stock has responded by falling about 4% as of 12:15 P.M. EST on Monday, while Nuuvera’s has responded by rising about 12%.

So what?

The deal values Nuuvera at $8.50 per share, which represents a premium of about 21.4% from its closing price of $7 per share on Friday, and its shareholders will receive $1 in cash plus 0.3546 shares of Aphria’s stock for each share held under the terms of the agreement. Aphria stated that it expects to issue up to 34 million shares in connection with the transaction, which represents approximately 20.8% of the currently issued and outstanding shares in the market.

Here are five other important notes to make about the transaction:

  1. The transaction “combines Aphria’s low-cost, high-quality cultivation at scale with Nuuvera’s expertise in cannabis processing, and provides access to Nuuvera’s state-of-the-art testing and extraction facilities.”
  2. The transaction is expected to be accretive to Aphria’s shareholders in the first full fiscal year after closing.
  3. Nuuvera’s highly experienced management team “will play a meaningful role within the combined company going forward.”
  4. The transaction is expected to close in April 2018.
  5. Aphria is entitled to a $25 million break-fee if the deal does not close.

Now what?

Vic Neufeld, Aphria’s CEO, stated that this deal “creates a true global leader in medical cannabis with excellent potential for growth and value creation,” and I could not agree more. This deal also comes just two weeks after Aphria agreed to acquire Broken Coast Cannabis for approximately $230 million and less than two months after it reached deals with Hiku Brand Company and Shoppers Drug Mart, so it’s clear that Aphria has its sights set on being the world’s largest cannabis producer.

With all of the information provided above in mind, I think all Foolish investors seeking exposure to the cannabis industry should consider Aphria to be one of the best investment options in the market today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joseph Solitro has no position in any of the stocks mentioned.

More on Investing

Nuclear power station cooling tower
Metals and Mining Stocks

If You’d Invested $1,000 in Cameco Stock 5 Years Ago, This Is How Much You’d Have Now

Cameco (TSX:CCO) stock still looks undervalued, despite a 258% rally. Can the uranium miner deliver more capital gains to shareholders?

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

3 Growth Stocks I’m Buying in April

These three growth stocks are up in the last year, and that is likely to continue on as we keep…

Read more »

clock time
Tech Stocks

Long-Term Investing: 3 Top Canadian Stocks You Can Buy for Under $20 a Share

These three under-$20 stocks offer excellent buying opportunities for long-term investors.

Read more »

Arrowings ascending on a chalkboard
Energy Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Canadian Natural Resources stock is well set up to beat the TSX as it continues to generate strong cash flows…

Read more »

think thought consider
Dividend Stocks

Down 10.88%: Is ATD Stock a Good Buy After Earnings?

Alimentation Couche-Tard (TSX:ATD) stock might not be the easy buy-case it once was. Here’s a look at what happened.

Read more »

money cash dividends
Dividend Stocks

TFSA Dividend Stocks: Earn $1,200/Year Tax-Free

Canadian stocks like Fortis are a must-have in your portfolio to earn tax-free yields for decades.

Read more »