What was said to be a hostile takeover has now turned into a friendly deal with a very friendly price. Alberta-based Aurora Cannabis will buy rival Saskatoon-based producer CanniMed Therapeutics Inc. for $1.1 billion. It's the biggest deal in the country's booming pot sector, and it took months of negotiations to reach.
It was just back in mid-November when Aurora made its first attempt to takeover CanniMed with a bid that valued the company's shares at $24. CanniMed refused, saying that the offer was too low. CanniMed even filed a lawsuit against Aurora, claiming it had conspired to injure the company's economic interests. The dispute went public, splashing itself on just about every major news media outlet in Canada. Among the vitriol, CanniMed described Aurora shares as “overvalued” and questioned the companies operational expertise.
The new deal amounts to about $43 per share based on an implied Aurora share price of $12.65 and a 3.40 exchange ratio. CanniMed shares closed up nearly 12% on the Toronto Stock Exchange Wednesday on news of the takeover. Canada's cannabis industry hasn't seen a deal this big since Canopy Growth, the country's largest marijuana producer, bought Mettrum Health for $430 million back in 2016.
Following the deal, Aurora's Chief Executive Officer Terry Booth downplayed the earlier war of words, declaring that the hostility is dead and buried. "We are very pleased to have come to terms with CanniMed on this powerful strategic combination that will establish a best-in-class cannabis company with operations across Canada and around the world."
The deal positions Aurora as the country's largest marijuana producer by market capitalization. “Our plans for CanniMed in Saskatchewan are very big. We’re not looking at cutting back: we’re actually looking at investing more and expanding more, and in fact accelerating the expansion plans that CanniMed already had in place,” Battley said. It was also stated that job cuts aren't an expected outcome of the buy-out and on the contrary, the combined company will ramp up production to meet the anticipated increase in demand.The only loser in this deal is the Tragically Hip-backed Newstrike Resources, which CanniMed had agreed to buy in an all-stock deal. With the new terms now in place, CanniMed must pay Newstrike Resources a $9.5-million “break fee” as they are excluded from the acquisition.
Author Bio: Parker Wallace is a cannabis enthusiast to the core who shares a keen interest in listening to what others have to say and understanding what’s important to them. He is also a regular contributor for Roottie Media, a Canadian based cannabis news and information site. Those who know Parker know that his passion for health and wellness runs deep, and his love of Canada even deeper!