Curaleaf Holdings (TSX: CURA) has stopped asking politely. The cannabis operator formally commenced an unsolicited takeover bid for Aurora Cannabis (TSX: ACB) taking its offer directly to shareholders after months of what it describes as fruitless attempts to negotiate with Aurora’s board.
Under the terms of the takeover bid, Curaleaf is offering 0.3463 of a Curaleaf subordinate voting share plus US$0.75 in cash for each Aurora share, implying US$4.00 per share based on Curaleaf’s August 10 closing price.
That works out to a 45% premium to Aurora’s 30 day volume-weighted average of US$2.75, and a 110% premium once Aurora’s roughly US$109 million in cash is stripped out. The offer is capped at US$5.00 per share, with the stock component adjusting downward if Curaleaf’s 20-day VWAP climbs above C$17.05.
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The bid expires December 1 at 5 p.m. Mountain Time and carries no financing or due diligence conditions. It does require more than 50% of independently held shares to be tendered, two-thirds of shares on a fully diluted basis, regulatory clearances, and that Aurora’s shareholder rights plan not stand in the way.
Curaleaf says it approached Aurora privately in June and again in July before going public with the offer, and that its proposal was built entirely from public filings because Aurora would not open its books.
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“A one-line response to an offer is not meaningful engagement — it is a dismissal,” said Boris Jordan, Curaleaf’s chairman and chief executive officer. “Today, we are putting this proposal directly in the hands of Aurora shareholders.”
Curaleaf’s pitch leans on scale and geography. A combined company would span 17 countries with more than US$1.5 billion in trailing revenue, close to US$350 million in adjusted EBITDA, and at least US$40 million in identified annual cost synergies. Jordan has also pointed to softening medical reimbursement in Canada and Germany, Aurora’s two most important markets, as evidence that standing still carries its own risk.
Aurora, for its part, has formed a special committee of independent directors to evaluate the proposal and disputes the characterization that it refused to talk, noting its lead independent director wrote to Jordan as recently as July 24 to signal openness to further dialogue. No decision has been made.
Curaleaf Holdings last traded at $
