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Aurora Cannabis Closes on Its Acquisition of Hempco Food and Fiber

By Joe Tenebruso – Updated Aug 20, 2019 at 10:39AM

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The leading marijuana producer is advancing its beachhead in hemp-based CBD.

Aurora Cannabis (ACB -2.50%) is expanding its empire.

The marijuana titan announced on Monday that it completed its acquisition of Hempco Food and Fiber. As part of the deal, Aurora acquired all of Hempco's outstanding shares it didn't already own for approximately 63.4 million Canadian dollars. Hempco will now operate as a wholly owned subsidiary of Aurora. 

Hempco is a provider of hemp-based foods, fiber, and nutraceuticals. Its brands include Planet Hemp food products and Praise nutritional supplements for animals.

Hemp leaves, oil, seeds, and fiber

Aurora Cannabis is strengthening its hemp business with its purchase of Hempco Food and Fiber. Image source: Getty Images.

Yet Hempco's primary allure for Aurora is its ability to produce high volumes of low-cost raw hemp, from which cannabidiol (CBD) can be extracted. CBD is a nonpsychoactive component of cannabis with potential health benefits. Sales of CBD are expected to grow rapidly in the coming years and could approach $24 billion by 2023 in the U.S. alone, according to the Brightfield Group.

To seize this lucrative opportunity, Aurora Cannabis has made multiple acquisitions to bolster its hemp production, processing, and distribution capabilities. The company has combined these businesses into Aurora Hemp, an operating unit with capabilities spanning across the entire hemp and CBD value chain.

"Through the addition of Hempco, we have assembled a world-class portfolio of high-quality hemp assets that together form the basis of a strong new operating division that will develop CBD-from-hemp around the world," CEO Terry Booth said in a press release.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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