Aurora Cannabis Inc. is reviewing an offer from a U.S. cannabis company interested in acquiring the Edmonton-based company. The announcement of forming a special committee to evaluate the unsolicited bid came shortly after Curaleaf Holdings Inc. disclosed its intention to acquire all shares of Aurora.
If successful, the acquisition would result in a combined cannabis entity operating in 17 countries across Europe, North America, and other global markets, according to Curaleaf. The company, based in Stamford, Conn., and listed on the Toronto Stock Exchange, decided to make its proposal public after unsuccessful attempts to negotiate privately with Aurora’s leadership.
Curaleaf stated that Aurora’s board declined to engage in discussions following the formal letter of intent sent by Curaleaf CEO Boris Jordan on June 23. Despite a follow-up letter on July 7, Aurora allegedly did not participate in constructive talks.
Expressing disappointment at Aurora’s lack of engagement, Jordan emphasized the substantial premium, compelling strategic rationale, and the need to avoid further delays. Curaleaf is willing to collaborate with Aurora’s board to progress towards a definitive agreement swiftly.
Curaleaf has suggested offering Aurora shareholders $4 US per share, along with an additional $0.75 US in cash for each Aurora share. Aurora confirmed receiving letters from Curaleaf outlining acquisition proposals but disputed Curaleaf’s claim of refusal to engage.
Aurora’s independent director recently corresponded with Curaleaf’s CEO, stating the company’s focus on executing its business plan and not discouraging future dialogues. Aurora plans to establish a special committee of independent directors to assess the proposal’s alignment with stakeholder interests.
While recognizing Curaleaf’s interest as positive, TD Cowen analysts Derek Lessard and Ryan Neal believe that the current offer undervalues Aurora’s long-term potential. The analysts highlighted Aurora’s market leadership, quality product portfolio, strong financial position, and ability to navigate international regulations as factors contributing to its long-term value.
Jordan noted that merging the companies would combine 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.
Describing the merger as advantageous for both Curaleaf and Aurora shareholders, Jordan emphasized the opportunity for Aurora shareholders to participate in a diversified global platform and benefit from U.S. regulatory developments.