In March, the company announced that it was bringing on billionaire investor Nelson Peltz as a strategic advisor. Normally, that’s a vague position and can mean anything and everything. However, in this case, it was noticeably different. For one, Peltz could end up being a big shareholder of the company, as he could end up with options to potentially purchase nearly 20 million shares of Aurora.
And from Aurora’s press release, his mandate appears clear: find potential deals. The company stated, “Mr. Peltz and Aurora will work collaboratively and strategically to explore potential partnerships that would be the optimal strategic fit for successful entry into each of Aurora’s contemplated market segments.”
With those kinds of goals and that kind of compensation, you can bet this is not your typical advisor position. This is a well-connected individual that has worked with some big-name companies. He has the type of connections that would help Aurora gain insight into potential deals.
Big banking experience added as well
Aurora also brought on another key executive into the mix: Carey Squires. The company created a new position for Squires, executive vice president of corporate development and strategy. Here again, Aurora noted in the press release, “Mr. Squires in collaboration with senior executives across the company will focus on global growth and partnership strategies and investor development.”
The company also specifically noted that he would be working on “partnerships and M&A opportunities.” Having worked for BMO Capital Markets, he knows a great deal about acquisitions and valuations.
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All the ingredients are there for Aurora to make a big splash
With Peltz offering the connections and business insights to help find a potential partner and Squires adding the oversight and focus on valuation, Aurora looks like it has a solid one-two punch of advisors that could help steer the company into what could be a significant deal. While cannabis companies haven’t been the most frugal, bringing big names like this on board are going to drive expectations from investors, and Aurora knows that.
The company has been in the sidelines, while its peers have been finding deals and the stakes are getting higher as we approach the legalization of edibles later this year. And given the pedigree of the individuals that Aurora has brought on board and even creating a new position for one of them, I’m inclined to believe Aurora isn’t content with a small partner; it’s looking to rock the industry with a massive deal.
There were rumours last year of the Aurora being in talks with Coca-Cola, although nothing came of that. Unfortunately, it may not be able to get a company of that size on board today, especially with the legal obstacles in the U.S. providing impediments for some of the bigger players. However, if Aurora truly wants to rival Canopy Growth, it’s going to need to swing for the fences, which is what I think the company is trying to do by bringing in some heavy hitters into its lineup.
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 David Jagielski has no position in any of the stocks mentioned.