Two major players in the Canadian medical marijuana market are set to create one of the world’s biggest pot production firms in a friendly $1.1 billion cash-and-stock deal.
Edmonton-based Aurora Cannabis announced an agreement Wednesday in which it will ante up on its previous hostile bid for CanniMed Therapeutics and buy all the shares of the Saskatoon company that it doesn’t already own.
Aurora now plans to pay CanniMed stockholders the equivalent of about $43 per share in Aurora shares, cash or a combination of their choosing, subject to prorating of the $140 million Aurora is making available in cash.
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“Market recognition of Aurora’s continued performance and strategy execution since we first announced our intention to acquire CanniMed allows us to share that benefit directly with CanniMed shareholders,” Aurora CEO Terry Booth said Wednesday in a release.
CanniMed CEO Brent Zettl, who along with the company’s board has committed to support the new bid, said Wednesday it “clearly confirms that the company has been highly successful in becoming a preeminent global leader in the medical cannabis industry.”
CanniMed earlier this month had gone so far as to challenge Aurora’s hostile bid in court, alleging in a $725 million suit that Aurora and several major CanniMed shareholders had “participated in a civil conspiracy intended to injure the economic interests of CanniMed.”
CanniMed at that time had instead urged shareholders to support its bid to buy another competitor, Toronto-based Newstrike Resources, whose Up Cannabis brand is well known for a partnership deal it reached in May with Canadian rock band The Tragically Hip.
Break fee
The terms of the new deal with Aurora, subject to the usual conditions and federal antitrust regulators’ approval, also call for CanniMed to walk away from its deal to buy NewStrike and pay the Toronto company an agreed-upon $9.5 million break fee.
The break fee, combined with Newstrike’s plan to fully convert a debenture it issued last fall and exercise common share purchase warrants it issued to CanniMed, leave Newstrike with a $14.1 million cushion it plans to use to speed up work on its new Niagara-area greenhouse and expand its rollout of the Up brand.
“These additional resources will immediately help us solidify Up as the leading cannabis brand in the emerging adult-use market,” Newstrike CEO Jay Wilgar said Wednesday in a separate release.
CanniMed had announced last Thursday it was postponing a special shareholders’ meeting that was to be held this week on the Newstrike deal, to instead consider a “possible transaction” with Aurora.
Aurora, a licensed medical marijuana producer, operates two production plants in Alberta and Quebec and has a second facility under construction in each province.
Aurora also already holds stakes in other production, processing and distribution companies including the Green Organic Dutchman, Aurora Nordic, Radient Technologies, Hempco Food and Fiber, Australia’s Cann Group and Germany’s Pedanios.
CanniMed has also been a major player in the Canadian medical marijuana business for 17 years, 13 of which were as the sole supplier to Health Canada under the country’s former medical marijuana system though its Prairie Plant Systems subsidiary.
The company, which started operation in underground growth chambers at Flin Flon, Man. in 2001, now has its main Canadian production plant above ground southeast of Saskatoon, plus a site at White Pine in Michigan’s Upper Peninsula. — AGCanada.com Network
