Aurora Cannabis Inc. has revealed its openness to consider an acquisition offer from a U.S.-based cannabis company aiming to take over the Edmonton-headquartered firm. The announcement of forming a special committee to review the unsolicited bid came shortly after Curaleaf Holdings Inc. announced its intentions to acquire all shares of Aurora.
If successful, the acquisition would result in the formation of a unified cannabis entity operating in 17 countries across Europe, North America, and other global markets, according to Curaleaf. The company, based in Stamford, Connecticut, and listed on the Toronto Stock Exchange, shared that it decided to publicly disclose its acquisition plans after unsuccessful private negotiations with Aurora’s leadership.
Curaleaf mentioned that Aurora’s board declined to engage in discussions following the submission of a formal letter of intent by Curaleaf’s CEO, Boris Jordan, on June 23. Despite a subsequent follow-up letter on July 7, Aurora purportedly showed reluctance to participate in productive talks.
Expressing disappointment with Aurora’s board’s response, Jordan emphasized the significance of the proposed premium and strategic alignment, indicating that further delays are unwarranted. Curaleaf expressed readiness to engage constructively with Aurora’s board to advance the transaction swiftly.
Curaleaf outlined a proposal to offer Aurora shareholders $4 US per share, along with an additional $0.75 US in cash for each Aurora share. Aurora acknowledged the receipt of letters from Curaleaf on the specified dates but refuted Curaleaf’s claim of refusal to engage with the offer.
Aurora clarified that its lead independent director had communicated with Curaleaf’s CEO as recently as July 24, indicating a focus on executing its short-to-medium-term business strategy. The company intends to establish a special committee of independent directors to assess the proposal’s alignment with stakeholders’ interests.
While acknowledging Curaleaf’s interest, Aurora cautioned that a deal is not guaranteed and reiterated its commitment to regular operations. Notably, TD Cowen analysts Derek Lessard and Ryan Neal opined that the current offer undervalues Aurora’s long-term potential due to its market leadership, product portfolio, financial strength, and regulatory expertise.
Jordan highlighted the potential value creation from merging the companies, emphasizing the synergy between Curaleaf’s global distribution network and Aurora’s international cannabis presence. The companies’ combined revenue exceeding $1.5 billion US over the past year and the anticipated annual cost synergies of at least $40 million US were also highlighted.
In conclusion, Jordan viewed the merger as mutually beneficial for shareholders of both companies, offering a diversified global platform and enhanced exposure to U.S. regulatory opportunities.
