Aurora Cannabis (NYSE: ACB) appears to be rolling. The other marijuana producer in the form of market value took 20% of the Canadian recreational market in the last quarter. Aurora began sending lucrative cannabis oils this week to Germany, the most important marijuana market outside North America. And now Aurora has picked up a billionaire in the fold.
The company has appointed Nelson Peltz as strategic advisor to help it explore potential partnerships. Aurora's stock price jumped up to 16% in early trading on the news.
What is the great solution about Peltz that goes along with Aurora Cannabis? Here are the three most important things you need to know.
1. Who Nelson Peltz is
Peltz is the founder and CEO of Trian Fund Management, a multibillion-dollar investment firm. Trian owns significant efforts in several large companies, including packed food Mondelez consumer goods giant Procter & Gamble food wholesaler Sysco and fast-food chain Wendys . Peltz is a board member of Wendys and is a member of the board of P & G and Sysco.
Peltz's background also includes being the CEO of Triarc Companies. During his time at the Triarc helm, Arby & # 39; s Restaurant Group and Snapple Beverage Group owned businesses. Earlier in his career, Peltz was CEO of the metal component manufacturer Triangle Industries.
In his current role, Peltz became known as an activist investor. He led Trian to invest in public companies that seemed to be undervalued, and then pushed the company's management team to implement changes to unlock their shares.
2. Why This Is A Great Deal For Aurora
Aurora Cannabis Has A Lot To Do For It: The company claims an industry-leading production capacity, and international operations are among the best for Canadian marijuana manufacturers. But unlike rivals Canopy Growth Cronos Group and Tilray Aurora does not have a large partner outside the cannabis industry.
The lack of a large partner has put Aurora at a competitive disadvantage, especially in relation to Canopy Growth. An investment of $ 4 billion from alcoholic drinkers Constellation Brands gave Canopy a large cash base for use in expanding; Aurora Cannabis clearly hopes that adding Peltz as a strategic advisor will improve its prospects of landing a great partner – and it can find more than one.
Aurora Cannabis clearly hopes that Peltz will be a strategic advisor. 19659003] CEO Terry Booth said Aurora is looking forward to working with Peltz to "expand our global global leadership for the cannabis industry by adapting Aurora, with each of the major market segments on which cannabis is put on." The segments referred to by Booth include beverages, cosmetics, pharmaceuticals and wellness products.
Peltz's comment confirmed that he is planning to actively seek partners for Aurora. He stated that the partnership with the company would include "potential engagement with mature players in consumer and other market segments."
3. How It Can Affect Investors
Investors have already felt a positive impact from Aurora bringing Peltz on board, with the marijuana shares spiking after the announcement. An analyst, GMP Securities & # 39; Martin Landry, increased his one-year awards target for Aurora by over 170% because he believes Aurora will now be much more likely to make strategic partnerships with Peltz's help.
If Peltz helps Aurora Cannabis fix a partnership in line with the agreement between Canopy Growth and Constellation, the shares are likely to soar even more. A great partner can place Aurora to toe toe with Canopy for the mantle of the top player in the global cannabis industry.
Peltz has a strong financial motivation to help the company succeed. Aurora gives him opportunities to buy nearly 20 million shares at a price well below the current share price. These options are quarterly over the next four years. However, if certain milestones are achieved, including "performing specific defined transactions" and the Aurora stock market at much higher levels for a specified number of days, the acquisition of these options may be accelerated.
You can probably expect the new billionaire on Aurora's team to get to work quickly.
Keith Speights has no position in any of the aforementioned shares. Motley Fool is short share of Procter & Gamble. Motley Fool recommends Constellation Brands. Motley Fool has a disclosure policy.