Entering text into the input field will update the search result below

Vivo (ABcann): Acquiring Canna Farms For The Easy Way Out

Feb. 08, 2019 1:04 PM ETMediPharm Labs Corp. (MEDIF), VIVO:CA11 Comments
Cornerstone Investments profile picture
Cornerstone Investments


  • Vivo (previously ABcann) decided to acquire an established producer after repeated failure in completing its own constructions.
  • We like the deal because Vivo management is clearly unable to meet its own deadlines and it needs capacity badly to participate in legalization.
  • Going into 2019, we expect Vivo to face tough competition along with other small/mid-cap producers including a looming oversupply.
  • We would suggest investors consider large-cap Canadian names which are better equipped to cope with a fundamentally challenging market in Canada as a result of the glitchy rollout of legalization.

We first wrote about Vivo (VVCIF) (then still called ABcann) back in April 2018 in the article "The Cannabis Player That Moves Like A Snail." From the article title, you can tell that we were clearly frustrated by the slow path of execution at the company and we urged management to pick up its speed. In this article, we will discuss what has transpired since our last article and where we see the company going into 2019.

Image result for vivo cannabis logo

What Happened Since April 2018?

Since our last article, the company changed its name from ABcann to Vivo Cannabis and made a large acquisition of Canna Farms. In short, we think Vivo is seeking the easy way out by acquiring Canna Farms which gave it instant access to an established cannabis producer with ample capacity potential. Vivo has failed very hard on its own capacity buildout plan, as we will illustrate later, and the company has chosen to acquire instead of build.

Perhaps given the repeated delay and revisions, Vivo could finally use this deal to get back on track. We think the Canna Farms deal was a great transaction, and actually a necessary one, to help Vivo stay in the game. Without this deal, we think Vivo will struggle a lot.

(Source: TSX)

Canna Farms Acquisition

On July 30, 2018, Vivo announced that it is acquiring Canna Farms, a private Licensed Producer in British Columbia. Canna Farms claims to be the first producer to be licensed for cannabis cultivation in British Columbia. Vivo paid $133 million including $22 million in cash and 92.5 million of Vivo shares at a deemed price of $1.20 (Vivo's share price has since dropped ~25%).

We think the main reason why Vivo acquired Canna Farms is that it needs to increase its capacity very badly. The company now

This article was written by

Cornerstone Investments profile picture
We are your best guide to cannabis investing. Read our 2021 Cannabis Sector Outlook here. We also provide in-depth industry analysis and coverage of 70+ cannabis stocks to help you get started.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.