Billionaire Investor Nelson Peltz and Aurora Cannabis Part Ways

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Billionaire investor Nelson Peltz is no longer advising Canada’s Aurora Cannabis, the company announced Monday.

In a news release, the Edmonton-based marijuana firm said Peltz had resigned to “pursue other commitments.”

Peltz, the CEO and founding partner of Trian Fund Management, a multibillion dollar hedge fund, was tapped by Aurora as a strategic advisor in March 2019. At the time, Aurora said it would “work collaboratively and strategically” with Peltz to identify potential international partnerships.

Indeed, when the relationship between Peltz and Aurora was first announced 18 months ago, many believed it would eventually lead to a tie-up with a U.S. consumer packaged goods company — similar to the one Canopy Growth Corporation struck with Constellation Brands -- because of his ties to companies like PepsiCo, Mondalez International and Kraft Heinz, among others.

Such a deal never transpired, even though Peltz was financially motivated to help get it done.

As a strategic advisor, Peltz was granted the option to purchase 19.6 million common shares at a price of C$10.34 ($7.75) per share. Those shares were set to vest on a quarterly basis over a four-year period, but the timeline could have been accelerated if Peltz had found a dance partner and helped 3X the value of Aurora’s stock.

Peltz’s departure is the latest shake-up at Aurora, which last week reported a net loss of $2.48 billion for its fiscal year.

Earlier this month, the cannabis company appointed Miguel Martin as its next CEO. Martin had been serving as Aurora’s chief commercial officer following the May acquisition of U.S.-based Reliva CBD Wellness, where he was president and CEO.

Martin took the reins from Michael Singer, who served as interim CEO for seven months after co-founder Terry Booth stepped down as CEO in February.

Aurora co-Founder Steve Dobler also stepped down as president and board director in June, and chief corporate officer Cam Battley was ousted from the firm at the end of the last year.

Aurora’s senior management issues as well as its struggle to generate a profit have been well publicized, and analysts who cover ACB haven’t pulled their punches.

MKM analyst Bill Kirk snared a New York Post headline last week after begging Aurora to “stop growing so much weed.”

According to Kirk, Aurora is “great at growing weed cheaply,” but Canadian consumers are not as interested in purchasing value product — which made up nearly three-quarters of Aurora’s flower revenue in the fiscal fourth quarter.

Jeffries analyst Owen Bennet made a similar observation, noting that Aurora’s Whistler, San Rafael and AltaVie products — all premium offerings — had been gaining traction and were “resonating well” with target consumer groups before the company shifted focus to its value brands, Daily Special.

“We really question the strategic rationale driving such an aggressive push into discount,” Bennet wrote, noting that Aurora executives told him separately that they “did not expect” its Daily Special discount brand to build so much early momentum.

Aurora’s overall Q4 revenue declined 9% even as the total volume of dried cannabis sold increased 36%, a direct result of the firm selling more of its lower-margin Daily Special brand.

As of press time, NYSE-listed shares of ACB were down 5%, to $4.79.

Over the last 52 weeks, the stock has lost more than 90% of its value.


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