- The billionaire Nelson Peltz is joining Aurora Cannabis as a strategic adviser.
- Investors complained that Aurora spent large amounts of money on numerous assets across the value chain, with perhaps little thought to which were best suited, according to Jefferies.
- "Peltz’s historical focus on profitability and efficient asset allocation" will support Aurora for the next stage of its growth, the firm says.
- Watch Aurora Cannabis trade live.
The marijuana producer Aurora Cannabis can solve its biggest problem now that the billionaire Nelson Peltz is joining the company, Jefferies says.
Some investors complained that the company spent large amounts of money on numerous assets across the value chain, with perhaps little thought to which were best suited, according to Bennett. And that’s where Peltz comes in.
Peltz, who has a net worth of $1.6 billion and serves as the CEO of Trian Fund Management, will join Aurora as a strategic adviser, working with the company to "explore potential partnerships" and help with its global expansion strategy, the company said on Wednesday.
"Peltz’s historical focus on profitability and efficient asset allocation" will prove valuable for the next stage of its growth, Owen Bennett, an analyst at Jefferies said in a note out following the announcement.
In February, Aurora announced that its extraction-technology partner Radient Technologies received its Standard Processing License from Health Canada. And in March, Aurora acquired rival Cronos Group‘s entire 19% stake in Whistler Medical Marijuana.
But the company has failed to generate any profits. In its second-quarter earnings release out in February, Aurora said its gross margin fell from 70% to 54% on a quarterly basis due to higher weed-production costs. As a result, the company lost 238 million Canadian dollars ($180 million) during the quarter.
"Peltz should support in ensuring assets are kept that yield most value," Bennett said. "Given his past, we would also suggest that his involvement should support in maximising the route towards profitability."
And Cowen’s Vivien Azer agrees that the Peltz will bring value to the marijuana producer.
"We focus on his ability to broker relationships with potential partners to fuel ACB’s expansion," Azer said in a note distributed Wednesday. "We look for ACB to be more methodical and patient in partnership selection than its Canadian peers."
Aurora was up 30% this year, including Wednesday’s gain.
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