Aurora Cannabis Acquires Europe’s Largest Organic Hemp Producer

September 17, 2018

Edmonton, Alberta, Canada-based Aurora Cannabis announced it has acquired Agropro, Europe’s largest producer, processor, and supplier of certified organic hemp and hemp products, as well as its sister company – hemp processor and distributor, Borela UAB, for C$8.1 million (US$6.2 million).

Although smaller financially, Seeking Alpha states that this acquisition may be Aurora’s best deal of the year, based on the high potential and low price of the transaction.

Together, Agropro and Borela process and distribute organic hulled hemp seeds, hemp seed protein, hemp flour, and hemp seed oil. They currently have 4,000 acres under contract potentially yielding more than 1 million kilograms of organic hemp with additional contracts available to them to expand by more than 3,000 acres across Eastern Europe in Lithuania, Latvia, Estonia, and Poland. With the additional 3,000 acres, Agropro has the potential to almost triple its current organic hemp yield.

The addition will play nicely with Aurora’s existing production strategy, and vertically integrated and horizontally diversified business that touches all key segments of the cannabis value chain from breeding and genetics research, to cannabis and hemp production, derivatives, value-added product development, home cultivation, and wholesale and retail distribution spanning 14 countries across five continents. 

Big Plans

Historically, Agropro has operated strictly as a hemp seed and contracting company, with much of the CBD-containing biomass being left in the field unused.

The hemp plant has three components: the seeds, which are used to produce food and personal care products; leaves and flowers, which produce CBD, used in wellness products, supplements, and beauty products; and the stalks, which are used to produce fibers, paper products, building materials, clothing, and other textiles.

Once this acquisition is complete, Aurora plans to extract, refine, and process this unused biomass into a range of organic CBD-based wellness products to create new revenue streams in the high-growth CBD wellness market throughout Europe, North America, and Asia.

Additionally, Aurora plans to leverage hemp’s rising popularity as a sought-after food supplement and meat substitute by the health food, vegetarian, and vegan markets due to its high protein, amino acid, vitamin, and mineral content. Aurora already has a presence in the hemp food market through its majority-owned subsidiary, Hempco, which will integrate Agropro’s organic supply and distribution to accelerate growth of high-margin food products.

“With our industry-leading team of crop and plant scientists, extraction and product formulation expertise, and wide-reaching global distribution networks and partnerships, we anticipate increasing production, extraction, refinement and supply of CBD, as well as other hemp-based food products,” said Neil Belot, chief global business development officer, Aurora Cannabis. “With a broad European footprint, extensive contracted land agreements and solid existing revenue streams, Agropro and Borela provide further expansion of our international footprint, while playing an important role in the execution of our CBD wellness and hemp-based food products strategy.”

Supporting this goal, on February 1, 2018, Boreal’s hemp grain processing facility became the only European hemp company to secure a BRC quality certificate, allowing the company to supply its products to supermarkets. Borela has also received USDA Organic, Eco-Cert, and other certifications that will open opportunities in various markets.

Food For Thought

Hemp’s position in the food sector has recently garnered the attention of Edinburgh-based private equity firm Inverleith, which in August of this year acquired a majority stake in Good Hemp, a UK-based hemp food and beverage company, through its parent company  Braham and Murray.

The global hemp-based food market is expected to see a CAGR in excess of 24 percent between 2018 and 2022, according to Technavio. This impressive growth is forecast to be largely driven by an expanding vegan population and a higher rate of diagnosis of celiac disease.

Founded in 1998 by Henry Braham and Glynis Murray at their farm in Devon, England, Good Hemp produces a range of hemp-based products including hemp milk, protein supplements, protein flours, and hemp seeds.

The company plans to use the funds and the expertise gained through this deal with Inverleith to expand distribution of its alternative hemp milk throughout the UK and into overseas markets; to expand its hemp-based product portfolio; and to launch a new marketing campaign that will shed light on Good Hemp’s nutritional benefits.

-Lynda Kiernan  

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.

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