Battley also addressed Aurora’s plans to enter the U.S. market following moves by competitors Tilray and Canopy Growth to set up access to a market that analysts estimate to be 10-times as large as the opportunity in Canada. Aurora brought in billionaire investor Nelson Peltz as a strategic advisor in March and Battley revealed how he has been guiding how Aurora could soon be acquiring U.S. cannabis players.
“One of the first things that he told us was, ‘Take your time to enter not just one mature industry, but multiple different verticals.’ And, he said, ‘That would be a better thing for us to do for our shareholders.’”
Any entrance to the U.S. market would have to thread multiple needles to appease regulators and exchanges, similar to the hurdles navigated by Canopy Growth’s tentative agreement to buy multi-state U.S. cannabis operator Acreage Holdings that is set to be executed only when the sale of cannabis becomes permissible at a federal level. Battley said Aurora would look to structure deals in a similar way that wouldn’t violate exchange rules, but maximize opportunities to sell multiple products in multiple states.
“Our interest in participating in large verticals with companies, in many cases based in the U.S., is about spreading that opportunity as much as possible,” he said. “We don’t want to give up control to one company in one mature industry. Ideally, we want to participate in multiple verticals, and we see the opportunity to do that and that will be the best thing for our shareholders.”
If historical precedence is any indication, investors might expect Aurora to fund future deals with more share issuances. The company has seen outstanding shares skyrocket to more than 1 billion as it funded acquisitions with common stock over the course of last year. However, Battley caveated that trend could change, considering the company has parlayed those stock-based deals into a cash flow positive future.
“That shareholder capital has been invested very, very wisely. On a go forward basis let’s remember that very soon we are going to be producing positive cash flow,” he said. “And so we’ve got great access to capital right now, we’ve got positive cash flow coming. The future is looking pretty bright.”