Cronos sells Whistler Medical shares to Aurora Cannabis
The marijuana producer sells its stake in Whistler Medical Marijuana to rival Aurora.
Cronos Group has sold its 19% of shares in Whistler Medical Marijuana to rival cannabis maker Aurora. Shares of the Canadian cannabis company fell 2% after the news.
Why is Cronos selling Whistler shares to Aurora?
Cronos has sold its shares in Whistler Medical, a medical marijuana company that produces 18 strains of pot and also sells CBD oil, to capitalise on the pot boom across the US and Canada. As the drug is legalised across much of North America, the growth in cannabis has led many marijuana companies to consolidate as a result.
In this strategic deal, Aurora will pay Cronos C$175 million for the stake in Whistler Medical. In return for the stake, Cronos will receive Aurora stock worth C$26.6 million dollars. Cronos will also receive an extra C$7.6 million shares based on the achievement of certain milestones after the acquisition.
Mike Gorenstein, chief executive officer (CEO), of Cronos, thanked Whistler for their partnership after selling the shares.
‘We'd like to thank and congratulate Whistler for their partnership over the past two years,’ said Gorenstein.
‘Whistler's commitment to creating high-quality products and establishing a premium brand has generated value for consumers and investors alike. We are proud to have been part of their growth and look forward to their progress through this venture,’ added Gorenstein.
Aurora CEO, Terry Booth, spoke about the expansion efforts the company wants to implement with its purchase of Whistler.
‘Applying certain of our best practices to the Whistler cultivation protocols, we anticipate an increase in capacity of the Pemberton facility beyond the stated 5,000 kg annual production target,’ said Booth in a statement.
What’s next for Cronos stock?
Cronos stock rose briefly before falling after Aurora acquired its shares of Whistler Medical. Though some investors say marijuana is a good investment and are bullish on the commodity, there is also concern about an oversaturation in the market. Cronos and Aurora hope that this consolidation will encourage investors to continue to invest in marijuana.
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