The hostile takeover bid between Aurora Cannabis (ACBFF) and CanniMed Therapeutics (CMMDF) is looking less hostile these days. CanniMed said that it will continue discussions with Aurora as the two companies faced a 5pm deadline today. CanniMed said that the two have decided to extend their talks.
During this extension of conversation, neither of the two companies will ask for proxies from their shareholders and Aurora will hit the pause button on buying more shares of CanniMed in the open market. Both companies agree to suspend making public statements about the transaction unless it is mutually agreed. The two companies also agreed not to move forward with discussions on alternative transactions either.
CanniMed said it still plans to hold a special shareholders’ meeting for Thursday, January 25 with the cutoff for proxies on Wednesday at 10 am eastern time with regards to the Newstrike acquisition.
The History Of The Deal
Originally, Aurora Cannabis initiated a plan in November to acquire CanniMed Therapeutics for C$24 a share, which at the time was a premium price. CanniMed rejected the offer and began a campaign the fight the acquisition. A war of nasty words took place with competing press releases as each company trashed the other publicly. CanniMed then decided to acquire Newstrike Resources (NWKRF) as a way to combat the deal.
Aurora publicly stated it didn’t think the Newstrike acquisition was a good deal for CanniMed and last week CanniMed said it was postponing a shareholder vote on the deal. Newstrike shareholders had voted in favor of being acquired by CanniMed. Today it is saying the vote will still be held. One can only imagine the shareholder’s frustration as this back and forth.
Aurora Could Buy Both
Now it looks as if Aurora could end up buying both properties. This is in contrast to the original plan that a Newstrike deal with CanniMed would cause the Aurora deal to terminate. If that were to happen (Aurora buying both), Aurora would have to raise its offer price as the stock values of all three parties have risen as the hostile bid drama has played out over the past few months.
CanniMed’s Toronto shares were lately trading at C$34, popping from C$20 at the end of December. Aurora’s shares lately traded at C$13, almost doubling from C$7.74 a month ago. Newstrike shares traded in the 50 cent range a month ago and closed on Friday at C$1.47.
If all three companies combined, the valuation could put it on par with Canopy Growth (WEED), currently Canada’s largest cannabis company with a market cap of C$7 billion.