September 22, 2022

By Lynda Kiernan-Stone, Global AgInvesting Media

Global cannabinoid leader Aurora Cannabis announced it has acquired a majority stake in Bevo Farms, one of the largest suppliers of propagated vegetables and ornamental plants in North America, for C$45 million (US$33.4 million).

Under the terms of the deal, over the three years following the closing, an additional $12 million will be payable by a subsidiary of Aurora to Bevo shareholders conditional on Bevo successfully achieving certain financial benchmarks at its Site One facility in Langley.

At the same time, through the acquisition of one of Aurora’s wholly-owned subsidiaries, Bevo is acquiring Aurora’s Aurora Sky facility – an 800,000 square-foot greenhouse on 30 acres located in Edmonton, Alberta.

In connection with this part of the deal, up to $25 million could be payable over time by Bevo to Aurora based on Bevo achieving certain milestones at the Aurora Sky site.

Founded in 1986, Bevo operates 63 acres of greenhouses in British Columbia, Canada, that are managed by a team with more than 85 years of agricultural experience supplying greenhouses, nurseries, field farms, and wholesalers.

Over the past 10 years, Bevo has consistently posted growth in revenue and earnings through process improvements and facility expansions. For the 12 months ending June 20, 2022 Bevo posted revenues of $39 million and adjusted EBITDA of $9 million.

Through this transaction Aurora will acquire 50.1 percent of Bevo’s outstanding common shares, taking a controlling position on the company’s board of directors and financially consolidating the company.

The acquisition will give Aurora immediate benefit from a profitable, cash flow positive and growing business, which has the potential to drive long-term value to Aurora’s existing cannabis business through the application of Beno’s industry leading plant propagation expertise. 

“This investment once again demonstrates our disciplined capital allocation approach and is consistent with both our short term needs and long-term vision to be the leading global cannabis company,” said Miguel Martin, CEO, Aurora.

“Bevo’s track record in generating not only positive Adjusted EBITDA but free cash flow, world class propagation expertise, and established distribution networks in Canada and the United States makes them an ideal strategic partner,” continued Martin. “We expect this investment and collaboration between industry leaders will drive significant shareholder value and synergies for both parties.”

Once the deal closes, Bevo’s management team will remain significant shareholders in the business and will stay in place to oversee a robust period of strategic growth, including the transition of the Aurora Sky facility to vegetable propagation and orchid cultivation.

“We are also excited about Bevo repurposing Aurora Sky,” said Martin, “and the potential to expand the scale and scope of their business and saving significant costs previously expected in connection with the wind down and sale of the facility.”

Leo Benne, president and CEO, Bevo commented. “We are delighted to join forces with Aurora to pursue our high growth strategy, starting with our move into Alberta which allows us to significantly expand Bevo’s addressable market.”

“We are incredibly happy that the Aurora team is committed to keeping all of our facilities dedicated to our customer base, and to expanding our operations into Alberta through the addition of the Aurora Sky facility,” continued Benne.

“It is clear that the Aurora team is deeply aligned with our existing business plans and objectives for profitable growth, and we look forward to building upon the strengths of Aurora as a sponsor to accelerate our business.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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