Aurora Cannabis has acquired a controlling interest in Bevo Agtech, a supplier of propagated vegetables and ornamental plants in North America. Concurrent with the closing of the Bevo Transaction, Bevo entered into an agreement to acquire the Company's Aurora Sky facility in Edmonton, Alberta, through the acquisition of one of Aurora's wholly-owned subsidiaries.
Bevo was previously owned by Zenabis Global, and this acquisition is happening before the company takeover by Hexo. Zenabis Global sold the subsidiary in 2021 to ease its debt. The company was sold in exchange for the removal of $42.5 million in debt from the books and $10 million cash.
Founded in 1986, Bevo operates 63 acres of greenhouse in British Columbia, Canada; it is led by a management team with over 85 years of agricultural experience and supplies greenhouses, nurseries, field farms, and wholesalers. Bevo has consistently demonstrated growth in revenue and earnings over the past decade through process improvements and facility expansions. For the twelve months ended June 30, 2022, Bevo has achieved revenues of $39 million and Adjusted EBITDA of $9 million (excluding non-recurring rental revenue). Bevo's business exhibits seasonality driven by agricultural growth cycles, with the strongest financial period being from January to June.
"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 a leading global cannabis company. 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," said Miguel Martin, Chief Executive Officer of Aurora. "We expect this investment and collaboration between companies will drive significant shareholder value and synergies for both parties. We are also excited about Bevo repurposing Aurora Sky 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 & CEO of Bevo, added, "Since its inception, Bevo has taken great pride in utilizing technology to become a plant propagator in North America. We are delighted to join forces with Aurora to pursue our strategy, starting with our move into Alberta, which allows us to significantly expand Bevo's addressable market. We are happy that the Aurora team is committed to keeping all of our facilities dedicated to our customer base and to expand our operations into Alberta through the addition of the Aurora Sky facility. It is clear that the Aurora team is aligned with our existing business plans and objectives for growth, and we look forward to building upon the strengths of Aurora as a sponsor to accelerate our business."
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