Ontario licensed marijuana producer Aphria has reached an agreement to acquire Ladysmith-based Broken Coast Cannabis in a deal worth $230-million.

“Broken Coast is committed to providing a premium and affordable product to its patient base while staying true to BC’s iconic cannabis brand and culture,” said Roberto Bresciani, director and co-founder of Broken Coast.

“Joining the Aphria team will open doors to keep innovating with our unique production process and cannabis genetics.”

All three co-founders will stay on with the company, which has amassed over 10,000 registered patients since being founded in 2013. Broken Coast will be paid $10 million in cash and the remainder will be in Aphria shares.

While the exact whereabouts of the Vancouver Island company’s 26,000 sq ft facility on a 4.5-acre parcel of land are unclear, Broken Coast’s address is listed as being in Ladysmith. An ongoing expansion will bring the size of the facility up to 44,000 sq ft.

Aphria in turn operates a low cost and scaled greenhouse platform in Leamington, Ont., a municipality on Lake Erie about an hour from the Windsor-Detroit border.

“While we are joining a talented large-scale greenhouse operator, Broken Coast will retain a high level of independence and our existing management and production teams will continue to drive our corporate strategy and produce incredible cannabis products,” Bresciani added.

Acquiring Broken Coast is also expected to add incremental annual production of 10,500 kgs, some of which is already market ready, bringing Aphria’s annual production forecast to 230,000 kgs. Aphria now becomes Canada’s largest Earning Before Interest, Taxes, Depreciation and Amoritization (EBITDA) licensed grower.

“Adding one of Canada’s most sought after premium brands represents a major triumph for Aphria and our shareholders and firmly establishes our position as a Canadian leader in premium indoor cannabis production,” said Vic Neufeld, Chief Executive Officer of Aphria.

“Broken Coast has proven that you can grow premium quality cannabis, charge a reasonable price and earn a profit all at the same time. Our two companies are closely aligned, particularly as it relates to our relentless focus on production costs and profitability.We look forward to learning from each other and bringing more Broken Coast cannabis to current medical patients and future adult recreational use consumers in Canada.”

Part of the deal also involves Aphria’s approval to immediately commence a $20-million Phase IV expansion at Broken Coast’s facility, adding another 4,500 kgs per year in production.

Construction is anticipated to be complete by late summer of 2018 with product coming to market early in the new year.

The deal remains subject to certain conditions and could close by Jan. 31, 2018.

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