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Aurora Cannabis To Acquire Remaining 48% Stake In Hempco Food And Fiber

Canadian marijuana producer Aurora Cannabis Inc. (ACB,ACB.TO) has agreed to acquire the remaining 48 percent stake in Hempco Food and Fiber Inc. (HEMP.V) that it does not already own, in a deal that values Hempco at about C$63.4 million. Shares of Hempco gained more than 10 percent in Tuesday's trading.

Aurora noted that the deal will strengthen the execution of its global hemp and CBD or cannabidiol strategy.

Under the terms of the deal, Aurora has agreed to pay C$1.04 per Hempco share, payable in common shares of Aurora. Aurora already owns about 52 percent of the issued and outstanding shares of Hempco.

Following completion of the transaction, Hempco will provide Aurora with low-cost, high-volume access to hemp for the extraction of CBD, which has been increasingly recognized for its therapeutic benefits across a wide range of medical indications and wellness applications.

Hempco is a maker of hemp-based foods, hemp fiber and hemp nutraceuticals. The company produces and markets the brands, Planet Hemp and Praise, hemp-based foods and nutritional supplements for people and animals.

Hempco is currently in the process of commissioning production at its new Nisku facility, a 56,000 square foot, 2.9 million kilogram per year hemp processing facility.

Aurora completed its first investment in Hempco in 2017. Subsequently, the company has expanded its hemp-based infrastructure through the acquisitions of Agropro, Europe's largest producer of organic hemp and hemp-based products, Borela and ICC Labs.

Aurora noted that the full integration of Hempco will add further capacity, brands and distribution channels to capitalize on the global CBD wellness opportunity, which is anticipated to grow to $22 billion by 2022.

"This transaction will enable us to fully integrate Hempco and its new Nisku processing facility into Aurora's global hemp operations including Agropro, Borela and ICC. Our goal is to strengthen our CBD-from-hemp supply chain as well as our hemp business of hemp-based superfoods, nutraceuticals and fibers," Terry Booth, CEO of Aurora said.

Hempco's board of directors have recommended that the company's shareholders vote in favor of the transaction. Aurora and Hempco said they expect to execute a definitive agreement on or before May 15, 2019.

Upon completion of the transaction, Hempco will become a wholly owned subsidiary of Aurora and its shares will be de-listed from the TSX Venture Exchange.

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