Aurora Cannabis Inc. said it plans to buy up to 40% of Liquor Stores NA Ltd.
The announcement comes more than a week after Aurora announced the C$1.1 billion acquisition of CanniMed Therapeutics Inc.
The Canadian medical cannabis producer will purchase 6.9 million Liquor Stores shares at C$15 apiece, representing 19.9% of the liquor seller, which operates 231 stores.
Following the C$103.5 million investment, which is expected to close Feb. 14, Aurora will funnel an additional C$34.5 million via the purchase of 2.3 million subscription receipts, which, once released from escrow, will increase the company's ownership in Liquor Stores to about 25%.
The transaction is backed by the boards of both companies.
Canada's Liquor Stores will use the investments to establish and launch a brand of cannabis retail outlets.
Liquor Stores will also issue 10,130,00 warrants, each of which can be exercised for a common share of the company for C$15.75 apiece.
Aurora will end up owning 40% of the company if it fully exercises the warrants following the second round of investment.
Liquor Stores will also issue another 1,750,000 warrants, which Aurora can exercise to maintain its equity stake if the former's debt holders convert their outstanding debentures for shares.
Aurora will have the right to nominate one director to the Liquor Stores board following the initial investment; it can name an additional board member once it owns at least 33.3% of the company.
Eight Capital acted as Aurora's exclusive financial adviser.
