These marijuana companies may seek an acquisition.
Competition in the marijuana market is surging thanks to the legalization of the recreational use of cannabis in October 2018 in Canada, and the growing number of U.S. states that have approved its medical and recreational usage. With these developments, more companies are looking to acquire smaller competitors to stay ahead of the pack. Canadian and U.S. companies will seek deals or partnerships as the industry heats up, says Jason Spatafora, co-founder of Marijuanastocks.com and a Miami-based trader and investor. “You’re going to see some acquisitions. It’s really about survival. You can’t go it alone as a late-stage company at this point,” he says. Here are seven marijuana companies that could seek acquisitions soon.
AbbVie (ticker: ABBV)
AbbVie, a Chicago-based biopharmaceutical company that was founded in 2013 after being spun off from Abbott Laboratories, could acquire companies, such as GW Pharmaceuticals (GWPH), Insys Therapeutics (INSY), Zynerba Pharmaceuticals (ZYNE) and Cara Therapeutics (CARA), to boost its pipeline of drugs, Spatafora says. “AbbVie could buy Insys, which has been hammered for their drug, Syndros, which is complementary to what they are doing,” he says. “AbbVie could take out all four companies in one shot and still have tons of money left over.” AbbVie offers a 5 percent dividend and reported $28 billion in revenue in 2017.
Green Growth Brands
Green Growth Brands, a Toronto-based dispensary company that trades on the Canadian Securities Exchange, made a hostile all-stock bid in December 2018 against Aphria (APHA). Green Growth Brands wants to acquire the Canadian-licensed producer because the company has “great value and not much risk,” says Peter Horvath, CEO of Green Growth Brands. Whether the deal with Aphria closes or falls apart, Green Growth Brands plans to be acquisitive in 2019. “There is going to be consolidation in the industry,” he says.