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Yesterday, CanniMed Therapeutics (CMED.TO) (CMMDF) CEO Brent Zettl spoke with BNN about its pending acquisition of Newstrike Resources (HIP.V) (NWKRF) as well as Aurora Cannabis’ (ACB.TO) (ACBFF) takeover bid.
After listening to this interview, our conviction level in combination of the Aurora Cannabis – CanniMed is even higher. CEO Zetti believes that his plan to buy Newstrike blows Aurora’s bid away and we think this couldn’t be further from the truth.
CanniMed investors have until January 19th to vote for or against the Newstrike acquisition and we hope to this offering rejected. Newstrike does not have sales. Aurora generated more than $2 million in revenue during November.
We already know that several major CanniMed investors are not happy about the Newstrike acquisition and we agree with this opinion. We do not a dog in this fight and don’t own a position in Aurora, CanniMed, or Newstike. We are simply making an opinion based on our knowledge of the companies and their position with the legal cannabis industry.
Aurora-CanniMed: An Acquisition that Makes Sense
Aurora’s acquisition of CanniMed makes sense.
One of the reasons why we are favorable on the potential of the combined company is due to the support that Aurora would provide CanniMed. Over the last year, Aurora has made several investments and acquisitions that would benefit CanniMed’s business.
Aurora has a war chest of a cash, strategic relationships, and significant infrastructure in Canada and abroad. While CanniMed has sold some of its cannabis oil in Australia and the Cayman Islands, Aurora has significant relationships and investments in Germany and Australia. If this deal is completed, Aurora would significantly enhance and expand CanniMed’s global reach.
Aurora has made strategic investments in Hempco Food and Fiber Inc. (HEMP.V) and Radient Technologies (RTI.V), which would significantly benefit the combined company. Industrial hemp grown by Hempco contains efficient extractable quantities of cannabidiol (CBD). Through Radient Technologies, Aurora can produce CBD-based products at scale, providing a considerable competitive advantage in addressing the burgeoning CBD oil market.
We are favorable on these relationships and the benefit they would have on CanniMed’s cannabis oil business. The combined company would have the capital and resources to execute on the global medical marijuana market and we are bullish on this opportunity.
What Happens Next Will be Big
With only one week left for CanniMed shareholders to vote for or against the Newstrike acquisition, this is something investors need to keep an eye on.
You can watch the video of CEO Zettl on BNN and decide for yourselves if you think this deal makes any sense.