Aphria Inc (TO:APH) announced a supply deal in Colombia as well as a distribution agreement with an alcoholic beverages maker
SmallCapPower | May 18, 2018: Aphria Inc. (TSX:APH) has made a few significant announcements this week following its larger competitor Aurora Cannabis Inc (TO:ACB) decision to acquire MedReleaf Corp (TO:LEAF) in an all-stock transaction valued at approximately C$3.2 billion.
On May 16, 2018, Aphria reported that it has signed an exclusive supply agreement with a Colombia-based pharmaceutical import and distribution company, Colcanna SAS, which is licensed to import, sell and distribute medical cannabis, medical products and derivatives in Colombia. Through this arrangement, the leading Canadian cannabis producer will be entering Colombian market, which should further propel its top-line growth.
According to the terms of the agreement, Aphria is going to be the exclusive supplier of cannabis products to Colcanna for the Colombian market and Colcanna will purchase medical cannabis products from Aphria solely. However, the financial terms of the agreement have not been released at the request of the importer.
One of Canada’s lowest-cost producers, Ontario-based Aphria grows, supplies, and sells medical cannabis. Through this arrangement, which will mark Canadian cannabis producer’s entry into Colombian market, Aphria’s top line should benefit in near future.
As well, a day later Aphria said it has signed an agreement in which Great North Distributors, a wholly-owned Canadian subsidiary of Southern Glazer’s Wine & Spirits, will serve as exclusive manufacturer’s representative for Aphria’s adult-use cannabis products throughout Canada, following the legalization of recreational cannabis for adult-use anticipated later this year. Late last year, alcoholic beverage giant Constellation Brands (NYSE:STZ) paid about $245 million for a 9.9% stake in Canopy Growth Corp (TO:WEED).
Recently, Aphria confirmed the delivery of its first shipment of medical cannabis to its Australia-based partner Althea Company Pty Ltd. The cannabis shipment is part of a previously-announced agreement between Aphria and Althea, in which Aphria has agreed to supply the Australian company with packaged co-branded cannabis oil and dried flower products for the Australian medical cannabis market. Aphria currently trades at market capitalization of $2.68 billion on the TSX with price-to-book multiple of 3.08x.
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.