Aurora Cannabis Inc. (ACB.TO) has agreed to purchase Uruguay-focused ICC Labs Inc. in an all-stock deal valued at approximately $290 million, as cannabis producers look to South America for growth beyond Oct. 17 when recreational marijuana use becomes legal in Canada.

Under the friendly deal, ICC shareholders will receive 0.2448 of an Aurora share for each ICC (ICC.V) share making the deal worth $1.95 per share. ICC shares closed at $1.79 on the TSX Venture Exchange on Friday.

The transaction is subject to court approval and a two-thirds majority vote by ICC shareholders.

The transaction marks Edmonton-based Aurora’s first major foray into the South American market. Aurora says ICC presently has more than 70 per cent market share in Uruguay, the first country in the world to legalize cannabis for adult consumer use. ICC is also a fully licensed producer of medicinal marijuana in Colombia.

“ICC is an ideal partner for Aurora to establish leadership in the South American cannabis market, delivering clear first mover advantage on a continent with over 420 million people,” said Terry Booth, CEO of Aurora, in a release. “The company has a very strong management team with deep connections throughout the continent, which we believe will facilitate successful expansion into all South American markets.”

Shares in ICC climbed more than three per cent to $1.86 on the TSX Venture, while Aurora rose more than one per cent to $8.22 on the Toronto Stock Exchange at 10:56 a.m. ET Monday.

The deal comes as Canadian cannabis firms continue to seek expansion opportunities in South America, which is viewed by the industry as the next big growth market.

In July, Canopy Growth Corp. (WEED.TO) acquired Colombian medical marijuana company Spectrum Cannabis Colombia S.A.S. in exchange for shares valued at about $45.7 million.

Later that month Leamington, Ont.-based Aphria Inc. (APH.TO) announced it is acquiring a subsidiary of Scythian Biosciences Inc. for an undisclosed price to establish a presence in Colombia.

Aphria CEO Vic Neufeld told BNN Bloomberg in an early July interview he doesn’t want more production capacity in Canada and called the South American market “truly very, very, exciting.”