Please ensure Javascript is enabled for purposes of website accessibility

The 5 Biggest Marijuana Acquisitions of All Time

By Sean Williams - Updated Feb 7, 2018 at 2:40PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The green rush has led to some monster deals, especially in recent weeks.

There's virtually no industry growing at a more breakneck pace at the momentum than legal marijuana. According to ArcView, one of the world's leading cannabis research firms, the North American weed industry is expected to grow sales by an average of 26% annually through 2021. This would imply almost $22 billion worth of cannabis being bought legally throughout Canada, Mexico, and the United States in just three years' time.

In recent years, cannabis businesses and investors have turned their attention away from convincing the public that cannabis should be legal -- practically every poll suggests the public agrees -- and have instead focused on capacity expansion. Some growers have chosen to expand organically, while others have partnered, merged, or acquired their way to growth and higher market share. The following five transactions represent the five biggest marijuana acquisitions of all time. 

Two men in suits shaking hands.

Image source: Getty Images.

1. Aurora Cannabis buys CanniMed Therapeutics: $852 million

The biggest marijuana deal of all was announced just two weeks ago on Jan. 24. It involved Aurora Cannabis' (ACB -37.55%) acquisition of Saskatchewan-based CanniMed Therapeutics (NASDAQOTH: CMMDF) in a cash-and-stock deal valued at $852 million, which was a 181% premium over the very first bid for the company.

What's noteworthy about this transaction is that Aurora made its first unsolicited bid for CanniMed all the way back on Nov. 14. However, CanniMed's board rejected the offer and initially refused to meet with Aurora's management team. CanniMed's board feared that Aurora would cut jobs in Saskatchewan and believed that its initial offer significantly undervalued CanniMed's business.

Now that the two have agreed to the buyout, Aurora Cannabis expects its production to vault from north of 100,000 kilograms of dried cannabis a year once its Aurora Sky project is complete in mid-2018, to over 130,000 kilograms a year with the CanniMed acquisition. Aurora is clearly gunning for market share if Canada keeps moving forward with a bill to legalize recreational pot by July. 

An outdoor commercial cannabis grow farm.

Image source: Getty Images.

2. Aphria buys Nuuvera: $670 million

Even more recently, on Jan. 29, Aphria (NASDAQOTH: APHQF) announced that it would be acquiring Nuuvera (NASDAQOTH: NUUVF) for $670 million in a cash-and-stock deal. It represented a roughly 21% premium over Nuuvera's closing price before the deal was announced. 

Though Aphria is known best for its organic growth and the four-phase, 1 million-square-foot project that'll be complete by January 2019 and yield 100,000 kilograms of dried cannabis a year, it's been an aggressive acquirer over the past couple of weeks. The move to buy Nuuvera significantly expands Aphria's international reach, especially given that it's one of the Canadian growers allowed to export dried cannabis to foreign countries that've legalized medical weed. 

In total, the deal expands Aphria's reach to 11 total countries and is expected to be accretive to earnings in the first full fiscal year upon closing. Considering that Aphria is one of two marijuana stocks to have generated a full-year profit in each of the past two years, that's music to its shareholders' ears.

Cannabis buds in and surrounding a medical cannabis bottle.

Image source: Getty Images.

3. Canopy Growth Corp. buys Mettrum Health: $283 million

Before Aurora Cannabis and Aphria went on a shopping spree over the past two weeks, the biggest marijuana deal of all time had been Canopy Growth Corp.'s (CGC -11.62%) purchase of Mettrum Health for approximately $283 million. This all-stock deal represented a 42% premium for Mettrum Health's shareholders when it was announced in late 2016.

The Mettrum deal came about long before Prime Minister Justin Trudeau introduced legislation to make recreational marijuana legal, so this was all about Canopy Growth's expansion of its medical-cannabis reach throughout Canada. The deal, when completed, increased the combined company's reach to around 40,000 registered medical patients, which at the time was about half of the country's registered medical patients. More importantly, it also expanded Canopy's growing capacity and licensed facilities. 

Of course, Canopy has grown considerably since this deal was announced. As of the end of its fiscal second quarter, Canopy Growth had 2.4 million square feet of growing capacity under construction or in development in British Columbia, with the option to lease another 1.7 million square feet in B.C. 

A potted cannabis plant next to a bottle of wine.

Image source: Getty Images.

4. Constellation Brands buys a 9.9% stake in Canopy Growth Corp.: $191 million

While not a pure buyout, the acquisition of a 9.9% stake in Canopy Growth Corp. by spirits giant Constellation Brands (STZ 0.40%) -- the company behind beer brands Corona, Modelo, and Pacifico, as well as a broad portfolio of wines and hard liquors -- ranks as the fourth largest of all time. When announced, it was valued at $191 million, although Constellation's investment has increased in size since closing.

The investment from Constellation Brands is designed to keep up with evolving consumer trends, and it was viewed by management as the next step for a company focused on the global alcohol business. Though Constellation Brands currently has no desire to sell marijuana products in the United States, it will consider selling cannabis products in countries that have legalized pot in some capacity.

What's more, the deal provided Canopy Growth with a potential channel to sell its goods via a brand-name producer and distributor. It looks to be a win-win for both parties. 

A cannabis leaf covering most of Ben Franklin's face on a hundred dollar bill, save for his eyes.

Image source: Getty Images.

5. Aphria buys Broken Coast Cannabis: $185 million

Finally, the fifth biggest deal of all time was the Jan. 15 announcement from Aphria that it was buying B.C.-based Broken Coast Cannabis for $185 million in a cash-and-stock deal. In other words, three of the five largest deals have all occurred within the past three weeks.

Broken Coast Cannabis currently has a 26,000-square-foot facility, but is in the process of aggressively expanding. Once complete in January 2019, the company is expected to have a maximum annual output of 10,500 kilograms of cannabis. When the deal was announced just days after Aphria partnered with Double Diamond Farms, management guided to around 230,000 kilograms of cannabis production in 2019. This would easily put Aphria among the top 3 pot producers in Canada.

In addition to increased capacity, the combination is expected to result in cost synergies as well. Aphria's supply chain, when combined with Broken Coast's distribution platform, should lead to lower costs and higher margins. 

In other words, don't expect merger and acquisition activity to slow anytime soon.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Canopy Growth Stock Quote
Canopy Growth
$4.91 (-11.62%) $0.65
Constellation Brands, Inc. Stock Quote
Constellation Brands, Inc.
$245.34 (0.40%) $0.97
Aurora Cannabis Stock Quote
Aurora Cannabis
$1.71 (-37.55%) $-1.02

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.