The morning after Boxing Day, CanniMed Therapeutics Inc. (CMMDF) happily announced that it got positive news in its battle against the hostile takeover from Aurora Cannabis (ACBFF). The Ontario Securities Commission and the Financial and Consumer Affairs Authority of Saskatchewan rejected Aurora’s request to shorten the deposit period with regards to bid period.
Normally, there is a 105 day minimum deposit period and Aurora had asked that it be decreased to 35 days. CanniMed felt that the shortened period was an attempt to pressure shareholders into tendering the hostile bid. Both commissions are requiring Aurora to issue a press release to amend its take-over bid to correct certain disclosures in other press releases that could affect the shareholder’s decision. According to the statement, the corrections would specifically address the date at which Aurora became aware of CanniMed’s meeting to acquire Newstrike.
Also in the statement, CanniMed said that it believes that the circumstances leading to the execution of the lock-up agreements and Aurora making its first proposal to the Board were done in a manner meant to coerce CanniMed shareholders and feels it is vindicated by the Commissions’ decision to require Aurora to correct deficient and misleading disclosures.
“While this clearly questionable behavior did not to meet the strict statutory test for joint actors, it does not pass the smell test of our shareholders and we believe that shareholders will be only more certain of this once Aurora amends and corrects its deficient disclosure,” said Brent Zettl, President, and CEO, CanniMed. “Common sense, and soon Aurora’s own words, indicate that Aurora has proceeded in a highly inappropriate and coercive manner, in order to disadvantage CanniMed shareholders and we expect this to be influential in our shareholders’ decision to vote for the Newstrike Acquisition and reject Aurora’s hostile bid.”
It wasn’t all bad news for Aurora. The commissions did not deny Aurora the ability to make open market purchases of up to 5% of CanniMed’s shares. Such purchases aren’t expected to affect the Newstrike acquisition.
“We are pleased with the Commissions’ decision and this is good news for CanniMed shareholders eager to support the Newstrike Acquisition to create real and significant value and confirms our belief that it was inappropriate for Aurora to seek to shorten the required bid deposit period and that disclosures made by Aurora were deficient and misleading,” added Zettl. “The Newstrike Acquisition remains an excellent opportunity for CanniMed and its shareholders and is clearly superior to Aurora’s inadequate hostile bid that offers phantom value based on an inflated Aurora share price. While we were disappointed that the commissions cease traded our shareholders rights plan, the rights plan was an appropriate and necessary response to the hostile bid and was beneficial to CanniMed and its shareholders as it provided the board time that was needed to consider the hostile bid and communicate with our shareholders who are eager to support the Newstrike Acquisition.”
In two months, Aurora Cannabis stock has shot up from $2.38 on November 1 to $6.16 as of yesterday’s close on the OTC Marketplace. CanniMed has also jumped from $10.06 on November 1 to its recent close of $15.40.