Aurora Cannabis Inc. is open to considering an acquisition offer from a U.S. cannabis company aiming to take over the Edmonton-based company. The announcement of a special committee to review the unsolicited bid came shortly after Curaleaf Holdings Inc. disclosed its intention to acquire all shares of Aurora.
Should the acquisition be successful, it would result in a merged cannabis entity operating in 17 countries across Europe, North America, and other global markets, as per Curaleaf. The company, headquartered in Stamford, Conn., and listed on the Toronto Stock Exchange, decided to make its proposal public following unsuccessful private negotiation attempts with Aurora’s leadership.
Curaleaf mentioned that Aurora’s board declined to engage in talks even after Curaleaf’s CEO, Boris Jordan, sent a formal letter of intent on June 23 outlining the acquisition proposal. Despite a follow-up letter sent on July 7, Aurora allegedly did not show willingness to participate in constructive discussions.
Expressing disappointment over Aurora’s lack of engagement, Jordan emphasized the significance of the premium, the compelling strategic rationale, and the need to avoid further delays. Curaleaf expressed readiness to collaborate with Aurora’s board to progress towards a definitive agreement swiftly.
Curaleaf proposed an offer of $4 US per share to Aurora shareholders, along with an additional $0.75 US in cash for each Aurora share. Aurora acknowledged receiving the letters from Curaleaf but disputed Curaleaf’s claim of Aurora’s refusal to engage, stating that ongoing dialogue was not discouraged.
Aurora plans to establish a special committee of independent directors to assess the proposal’s alignment with stakeholders’ best interests. While no assurance of a deal was given, Aurora committed to continuing normal operations during the process.
Despite the encouragement from Curaleaf’s bid, TD Cowen analysts Derek Lessard and Ryan Neal believe that the current offer undervalues Aurora’s long-term potential. They highlighted Aurora’s market leadership in medical cannabis, robust product portfolio, sound financial position, and adeptness in navigating international regulations as factors contributing to its substantial future value.
Jordan emphasized the merger’s potential to unlock value by combining Curaleaf’s global distribution network with Aurora’s prominent international medical cannabis business and production capabilities. The companies collectively generated over $1.5 billion US in revenue in the past year, with Curaleaf anticipating annual cost synergies of at least $40 million US from the proposed acquisition.
Characterizing the merger as advantageous for both companies’ shareholders, Jordan emphasized the opportunity for Aurora shareholders to partake in a diversified global platform and benefit from U.S. regulatory trends.