The Motley Fool

Is Aurora Cannabis Inc (TSX:ACB) Working on a Big Deal?

Image source: Getty Images

Aurora Cannabis (TSX:ACB)(NYSE:ACB) has been making some big, subtle moves lately.

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.

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.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

Fool contributor David Jagielski has no position in any of the stocks mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.