Aurora Cannabis is buying an organic medical marijuana company in the latest pot M&A tie-up

AP Photo/Richard Drew

The symbol for Aurora Cannabis appears above a trading post on the floor of the New York Stock Exchange as the Canadian company lists, Tuesday, Oct. 23, 2018.

• Aurora Cannabis announced its intention to acquire the organic marijuana producer Whistler Medical Marijuana Corporation on Monday.
• The all-stock deal is valued at up to $132 million ($175 million CDN).
• Analysts say the deal gives Aurora a leg-up on branding power, as advertising is heavily restricted in the Canadian marijuana industry.

Aurora Cannabis on Monday said it's acquiring Whistler Medical Marijuana Corporation, an organic cultivator based in Whistler, British Columbia, in an all-stock deal worth up to $132 million ($175 million CDN).

The deal follows a string of high-profile acquisitions Aurora made in building out its domestic and international footprint last year, including the takeover of publicly traded MedReleaf in a $2.3 billion stock deal. It's also the latest deal in what has already been a hot few weeks for M&A in the cannabis industry.

Analysts said the Whistler deal gives Aurora a leg-up on branding power, in an industry where advertising is heavily restricted.

Aurora hopes to capitalize on Whistler's "brand appeal" - Whistler is a world-famous ski town and vacation destination - and expand its footprint into Western Canada, the company said. And British Columbia has long been famous for the quality of its marijuana.

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"Due to the nascent stage of the industry, we believe Whistler provides Aurora with one of only a few established brands in Canada (albeit a modest one) in an industry that imposes strict regulations on branding/advertising," Matt Bottomley, an analyst at the investment bank Canaccord Genuity said in a Monday note to clients.

Founded in 2013, Whistler is one of Canada's original 10 licensed marijuana cultivators. The company operates two indoor marijuana cultivation facilities in British Columbia, including one under construction in Pemberton. Once running up to full capacity, Whistler expects to have a combined production capacity of 5,000 kg per year, and the company holds agreements to sell medical cannabis to the Cayman Islands and Australia.

Aurora's stock was up around 2.5% at midday on Monday, after hitting a high of $6.77 per share.

As well, Whistler has a suite of organic-certified derivative products, including high-THC and CBD oils, which Aurora says would expand its product offerings.

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"This transaction adds an iconic, organic certified BC-based brand with exceptional traction and a significant price premium in both the medical and retail markets," said Terry Booth, Aurora's CEO, in a press release.

Stoic Advisory, a boutique investment bank, acted as an advisor on the deal and McMillan LP acted as legal counsel to Aurora.

In an interesting wrinkle to the deal, Cronos Group, another publicly traded marijuana cultivator and a rival to Aurora, owns a 21.5% equity stake of Whistler. Altria, the tobacco-maker behind Marlboro, invested $1.8 billion into a 45% equity stake of Cronos Group late last year.

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