CanniMed Archives - Green Market Report

StaffStaffMarch 19, 2018
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CanniMed Therapeutics (CMMDF) reported that its sales rose 41% to $4.8 million from last year’s $3.4 million for the same time period. The company said that rising demand for dried medical cannabis caused those sales to jump 33% to 455kg with an average selling price of $10.56.

Net earnings for the first quarter were $5.3 million and according to the company statement,  included a $23.6 million gain on derivative instruments (Q1 2017 – $3.9 million net loss, including a $2.4 million loss on derivative instruments) that was partly offset by transaction costs of $13.1 million (Q1 2017 – $nil) and a mark to market loss on marketable securities of $2.2 million (Q1 2017 – $nil).

“CanniMed’s continued success reflects our accomplished team that always strives for excellence and remains focused on high-quality products from GMP compliant production practices,” said Brent Zettl, CEO, CanniMed. “This past quarter we have met many key milestones, including new product introduction and capacity growth. Now, as CanniMed transitions and integrates with Aurora Cannabis, I am confident that our tremendous people will continue to serve our customers well and help Aurora to realize even greater accomplishments.”

Readers may recall the epic battle that took place between Aurora Cannabis (ACBFF) and CanniMed Therapeutics. Last week,  Aurora announced that it had completed its initial take up of common shares.  Aurora extended the period in which shareholders of CanniMed may tender their shares under the offer to March 25, 2018.

Pipeline

CanniMed is targeting production expansion which is estimated to reach 17,000 to 21,000 kg within the next 24 months. The company launched CanniMed Topical Cream, a new product that has been formulated to provide relief from pain and inflammation and began fulfilling orders and shipping Topical Cream Kits.

The company is also prepared to commence sales of cannabis oil capsules, in anticipation of Health Canada approval in the second quarter of 2018.

During the first quarter of fiscal 2018, CanniMed announced that it had entered into an international marketing and distribution agreement with leading global pharmaceutical compounding company Fagron NV.


Debra BorchardtDebra BorchardtJanuary 25, 2018
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After months of nasty fighting, Aurora Cannabis (ACBFF) and CanniMed Therapeutics (CMMDF) have finally come to friendly terms. The once-hostile takeover bid by Aurora Cannabis to acquire CanniMed has ended on friendly terms.

On Wednesday, the Special Committee of the CanniMed Board agreed to support a new offer made by Aurora to buy all outstanding shares of CanniMed not owned by Aurora. In addition, the new offer will be supported by the locked-up CanniMed shareholders representing 36% of CanniMed’s outstanding shares and by Brent Zettl, President, and CEO of CanniMed.

A High Price To Pay For Cannabis

Originally, Aurora had planned to pay $24 a share, it has now been forced to pay $43 – a 181% premium over the closing price of CanniMed Shares on November 14, 2017. It’s a 79% increase in the previous offer Cap Price of $ 24.00. The total value of the deal is now approximately $1.1 billion based on Aurora’s implied share price of $ 12.65.

According to the company statement, “The maximum amount of cash available under the amended offer will be $140 million, and the number of Aurora shares to be issued will be between approximately 72 million (assuming full cash elections) and 84 million (assuming full share elections and no cash elections). Assuming maximum cash elections, each CanniMed shareholder would receive $5.70 in cash and 2.9493 Aurora shares.”

Aurora shares fell 5% on the news of the finalized deal and were lately trading at $11.35 on the OTC Marketplace.

Newstrike Deal Is Off

During the hostile days of the attempted takeover, CanniMed had embarked on an acquisition of Newstrike Resources (NWKRF). That deal is now over. CanniMed entered into a termination agreement with Newstrike that is resulting in breakup fee payment of a $9.5 million.

Aurora had characterized the acquisition and supply agreements signed with Newstrike as “bizarre.” Questioning why CanniMed would sign a supply agreement with a company it was going to acquire. Newstrike shareholders had approved of CanniMed acquiring the company. Newstrike shares plunged 18% on the breakup news and were lately trading at $1.19.

Reuters had reported that Aurora was considering buying both companies, but that now looked to be premature.

Management Comments

“We are very pleased to have come to terms with CanniMed on this powerful strategic combination that will establish a best-in-class cannabis company with operations across Canada and around the world,” said Terry Booth, CEO of Aurora. “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 by increasing the offer price, as well as by offering a cash component. ”

Brent Zettl, President, and CEO of CanniMed, added, “A testament to the great team at CanniMed, this transaction clearly confirms that the Company has been highly successful in becoming a preeminent global leader in the medical cannabis industry. In this leadership position, CanniMed has provided invaluable education, resources, support and relief of symptoms for thousands of patients served around the globe.”

“This is an excellent outcome for both Aurora’s and CanniMed’s shareholders after a hard-fought and diligently negotiated process,” said Cam Battley, Aurora’s Chief Corporate Officer. “We now look forward to warmly welcoming CanniMed’s employees and forging one unified team. Together, under the Aurora banner, we’ll continue to invest in domestic and international growth, and continue executing on our strategy of building the most dynamic, innovative integrated cannabis company in the world.”

Was It Worth It?

The two sides were publicly very nasty to each during the battle leading many industry insiders to feel that there was more going on behind the scenes than the two companies let on. So, whether the companies can truly bury the hatchet will remain to be seen.

Plus, at $1 billion Aurora will need to sell a lot of cannabis to break even on this deal. Aurora says it is “on track for a total production capacity of around 200,000 kg per annum.” According to Statista, the average price Aurora gets per gram is $8. That translates to $1.6 billion a year. However, that is a total production, not just CanniMed. CanniMed is only able to grow 7,000 kg a year at this time. That’s only $56 million. Even if CanniMed can ramp up and grow more, it will be years before Aurora makes a profit on this deal.


Debra BorchardtDebra BorchardtJanuary 22, 2018
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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.

 


Debra BorchardtDebra BorchardtJanuary 3, 2018
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Every week it seems there is a new twist and turn to the Aurora Cannabis (ACBFF) hostile takeover of CanniMed Therapeutics (CMMDF). Yesterday after the market close, Aurora announced it acquired an additional 116,000 shares of CanniMed in the open market. Today it appealed to CanniMed’s shareholders by characterizing the latest Newstrike supply agreement as ‘bizarre.’

In a no-holds-barred comment Cam Battley, Executive Vice President of Aurora said, “Simply put, this is a bizarre action by CanniMed management. Why would CanniMed sign a supply agreement with a company they have proposed to acquire in three weeks? Why would they sign a supply agreement with a company that doesn’t have a sales license, and therefore has no ability to fulfill the agreement? If CanniMed needed to purchase wholesale product, they could easily have signed a supply agreement with any number of producers currently licensed to sell. CanniMed has never previously entered into a wholesale supply agreement, nor ever indicated that they needed additional supply. So it’s reasonable to ask whether their announcement actually meets the definition of a supply agreement as commonly understood – or whether it represents a disguised scheme to achieve other objectives.”

CanniMed never wanted to be acquired by Aurora and has also made comments questioning Aurora’s success. The company has adopted poison pills to fight the deal, which Aurora has been very quick to expose and counter.

Battley went on to add, “It’s clear based on publicly disclosed information that Newstrike is in urgent financial need. Is this an attempt to transfer CanniMed capital sufficient to keep the lights on and the doors open at Newstrike? Alternatively, is this an attempt to entrench a relationship between CanniMed and Newstrike under adverse terms that are counter to the interests of CanniMed shareholders, as the latest attempt at creating a poison pill? Given that CanniMed shareholders are due to decide in the next few weeks on both the proposed CanniMed-Newstrike transaction and the Aurora Offer to acquire CanniMed, Aurora believes it is incumbent on CanniMed management to disclose the terms of the supply agreement they have signed with Newstrike’s Up Cannabis subsidiary.”

Aurora made it clear it wants CanniMed to disclose the terms of the supply agreement. Battley said the agreement warrants disclosure as a material agreement through Sedar (the U.S. equivalent of the Securities and Exchange Commission). He wants to know what price the product will be purchased at, the expected timing of deliveries under the agreement, what the conditions are for the renewal of the agreement, and how it can be terminated. That said, if Aurora does acquire CanniMed it plans to terminate the agreement.

Aurora Keeps Buying Shares Of CanniMed

Aurora acquired 116,000 shares of CanniMed on December 29 in the open market with the highest price paid per share at C$24. The company has acquired 566,000 shares at an average price of C$22.82 through the Toronto Exchange.  CanniMed has over 19 million shares outstanding according to the exchange company listing bringing Aurora’s ownership to approximately 2.85%.  CanniMed shares have traded in a 52-week range of $5.66 to $18.61 on the OTC Marketplace and were lately trading at $19.32 as investors have seen their shares rise on the two companies engage in a very public battle.

Aurora’s stock has also popped on the war of words. Its shares on the OTC Marketplace have run up to $8.38 and were lately trading at $10.70. The company also announced on January 2, that its liquid assets exceeded C$500 million. It stated that “For the month of November 2017, Aurora achieved record net cannabis revenues of $3.1 million, based on sales of 354,000 grams or gram equivalents in Canada and through the Company’s wholly owned German subsidiary Pedanios.”

Ultimately, it will be up to the CanniMed shareholders as to whether they vote to be acquired by Aurora and after this bloody battle, it will certainly be a bittersweet victory if Aurora wins.

 


Debra BorchardtDebra BorchardtDecember 27, 2017
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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.


Debra BorchardtDebra BorchardtDecember 19, 2017
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Canadian company Aurora Cannabis (ACBFF) is making a strategic investment in Micron Waste Technologies and in return will receive a cut of the gross revenues. Micron Waste (MICWF) is a developer of a proprietary digester solution that treats organic waste which can be used for the waste generated from the cultivation and production of cannabis products. Aurora produces and distributes medical marijuana in Canada.

Terms Of The Agreement

Micron Waste will pay Aurora a royalty equal to 4% of gross revenues generated by Micron, but Micron will keep all intellectual property pertaining to its digestion system. Aurora will have the right to subscribe for up to 6,000,000 shares of Micron at a subscription price of $0.34 per share for aggregate subscription proceeds of $2,040,000 million which represents a 9% interest in Micron on a non-diluted basis immediately post-investment. Upon the first successful sale of a digester within the cannabis industry, Micron will give 2 million shares to Aurora.

New Technology

According to the company statement, Micron has developed a new technology, based on aerobic digestion and subsequent treatment, that converts organic waste into clean water that meets municipal effluent discharge standards. The effluent from currently available digester-based treatment systems of organic waste does not meet municipal discharge standards and requires costly further treatment. Many generators of the organic waste elect, instead, to use municipal landfill sites for their organic waste, which is costly and has a negative impact on the environment. The merits of Micron’s technology have been successfully demonstrated with a grocery supermarket chain located in British Columbia, Canada, and Micron has entered into a Memorandum of Understanding with the group to plan for additional installation of Micron’s organic waste digester units at other locations in BC.

Management Comments

“The treatment and disposal of organic waste in the cannabis industry is a time consuming and costly exercise that is subject to strict regulation by Health Canada,” said Terry Booth, CEO of Aurora. “Micron’s solution promises to be a very elegant, highly efficient and low-cost alternative that will also have a positive impact on the environment. In making this investment, we anticipate benefiting not only from the positive impact on our operations, but also by being exposed to the upside potential of Micron’s commercial development. We look forward to collaborating with Micron in furthering the market reach of this very promising technology.”

“Aurora’s investment provides additional funds to accelerate diversification into other sectors, such as supermarkets, quick-serve restaurants, agricultural operations, and hotels, which are all faced with high organic waste disposal costs,” said Rav Mlait, CEO of Micron. “While our goal has always been to deliver solutions that have a positive impact on the environment, the only way to truly make a difference is by having a value proposition that provides a strong commercial rationale for adoption.”

The Battle With CanniMed Continues

While Aurora is making deals with Micron, the company does not want its potential new acquisition CanniMed (CMMDF) to make any of their own deals. On Monday, Aurora filed a dissident circular against CanniMed’s planned acquisition of Newstrike Resources. Aurora believes that the Newstrike deal is inferior to their own offer to acquire CanniMed.

Booth said, “It doesn’t take a genius to see that a company with no revenues, no sales license, no patients, no intellectual property of significant value, no track record, and not enough funds to continue operating and funding its own expansion, should not be worth giving 35% of CanniMed away to Newstrike shareholders.”

CanniMed has been fighting a hostile takeover by Aurora Cannabis. A hearing is set for December 20 with the Ontario Securities Commission regarding the takeover and whether Aurora proceeded improperly. In the meantime, CanniMed has been putting several poison pills in place to fight the potential acquisition.

 Performance

Aurora Cannabis was lately trading at $5.46, down slightly from its 52-week high of $6.86. Micron Waste shares were lately trading at 43 cents, jumping 12% on the news. CanniMed was lately trading at $15.23, also down from its 52-week high of $17.15, but up dramatically from its year low of $5.66.


Debra BorchardtDebra BorchardtDecember 12, 2017
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This story was updated on 12/13/2017 to reflect additional information.

Aurora Cannabis (ACBFF) fired back at CanniMed Therapeutics (CMMDF) after the latter released a statement saying it was appealing to the government and regulators to reject the hostile takeover. Aurora is offering CanniMed shareholders a 57% premium over the stock price and it was not happy that CanniMed suggested to the regulators that by rejecting the deal CanniMed shareholders would get better returns on their investment.

CanniMed Chief Executive Officer Brent Zettl also suggested that the company would lose jobs and that patients wouldn’t receive a quality product. Aurora said in a statement, “Aurora has previously stated publicly that the Company intends to continue to invest in and expand operations and employment in Saskatchewan. Such investment will include accelerating the pace of completion of CanniMed’s expansion project, and elevating the quality of CanniMed’s production practices and standard operating procedures to achieve European Union (EU) Good Manufacturing Practices (GMP) certification – which Aurora has already achieved at its Aurora Mountain facility in Cremona, Alberta.”

According to Aurora, The Star Phoenix reported that the Government of Saskatchewan rejected the CanniMed CEO’s outreach and that a spokesperson with the Ministry of Economy said it “views this strictly as a commercial transaction, and will not be commenting further.” However, on Tuesday, The Ontario Securities Commission scheduled a hearing for December 20 on CanniMed Therapeutics’ request to intervene in a hostile takeover bid by bigger rival Aurora Cannabis.

Aurora Fights Back In War Of Words

“This is the latest in a series of increasingly desperate schemes by CanniMed management that would have the effect of disenfranchising their own shareholders and preventing them from exercising their fundamental rights,” said Terry Booth, CEO of Aurora. “We made a bona fide offer, featuring a compelling premium that 38% of existing CanniMed shareholders immediately supported and continue to support through lockup agreements, including two prominent Saskatchewan-based investment funds. We had hoped to make this a friendly and collaborative process, but Mr. Zettl refuses to even pick up the phone or return our calls to have a discussion. So we took our offer directly to CanniMed shareholders. In response, CanniMed’s management and Board adopted several poison pills that will have the effect of diluting CanniMed’s stock, draining the company’s cash resources and directly taking money out of its shareholders’ pockets. Now, management, in a last ditch effort, has tried and failed to use the provincial government to keep them in control and protect them from their own shareholders. That’s not what I call acting in the best interests of their shareholders.”

CanniMed’s share price increased 27.5% between its Initial Public Offering on December 29, 2016, and Aurora’s offer to acquire CanniMed on November 13, 2017. It was lately trading on the OTC Market at $$15.56, down from its 52-week high of $17.15. Aurora’s share price increased by 180% over the same period and was lately trading at $5.62, a bit lower than its 52-week high of $6.86.

 


Debra BorchardtDebra BorchardtDecember 11, 2017
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CanniMed Therapeutics (CMMDF)has made it clear that it does not want to be acquired by Aurora Cannabis (ACBFF). The company announced that it has applied to the Financial and Consumer Affairs Authority of Saskatchewan and the Ontario Securities Commission for help regarding the hostile takeover.

CanniMed said that Aurora’s offer should be considered an “insider bid” for the purposes of applicable Canadian securities laws. They claim that SaskWorks Venture Fund Inc., Apex Investments Limited Partnership, Golden Opportunities Fund Inc. and Vantage Asset Management Inc. (locked-up shareholders) are all working with Aurora. Stating, “The CanniMed Shares of the Locked-Up Shareholders be excluded from the 50 per cent minimum tender condition contained in section 2.29.1(c) of National Instrument 62-104 – Take-Over Bids and Issuer Bids”

CanniMed is also asking the following from the regulators:

  • The Hostile Bid is an “insider bid” for purposes of MI 61-101 and consequently, Aurora be required to obtain a formal valuation in connection with the Hostile Bid and otherwise comply with the requirements in Part 2 of MI 61-101;
  • The Hostile Bid be cease-traded until 105 days after a take-over bid circular that complies with the rules for an “insider bid” as required by MI 61-101, is delivered to the CanniMed Shareholders;
  • Aurora is required to retract and correct several materially false and misleading statements in connection with the Hostile Bid; and
  • Each of the Locked-Up Shareholders failed to issue news releases and file Early Warning Reports as required by Part 5 of NI 62-104 and Part 3 of National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues.

Aurora made an offer to acquire CanniMed on November 13, 2017, in a C$582 million ($453 million) offer. CanniMed is instead urging shareholders to reject that deal and support its proposed acquisition of Newstrike Resources Ltd., a marijuana firm backed by the Tragically Hip.

The two companies have been at odds over the proposed acquisition. Aurora says it made a formal offer, while CanniMed disagrees and said no formal offer was ever made. While the two were arguing publicly over the proposed offer, CanniMed moved forward with Newstrike. CanniMed also began putting poison pills in place to sour Aurora’s desire to takeover the company. In a company statement CanniMed said, “By approving the Newstrike Acquisition, CanniMed Shareholders can create a premier cannabis company that is positioned to offer innovative, high-quality products with two distinct top-tier brands that are each well-positioned to address key product trends and emerging drivers of growth in both the medical and adult use recreational cannabis markets. Taking this step will make CanniMed more valuable to any future acquiror.”

CanniMed went on to note that Aurora has had two product recalls in less than a year and its Aurora Sky is delayed with increasing costs. The company also suggested that Aurora’s management sold stock ahead of a stock decline and that it had an “aggressive and unfocused acquisition strategy.” CanniMed also said that the Aurora offer is tilted in favor of their shareholders.

Aurora Fires Back

Aurora said it wasn’t even looking for such a deal, but that some of CanniMed’s shareholders approached them. “This is the latest in a series of increasingly desperate schemes by CanniMed management that would have the effect of disenfranchising their own shareholders and preventing them from exercising their fundamental rights,” said Terry Booth, CEO of Aurora. “We made a bona fide offer, featuring a compelling premium that 38% of existing CanniMed shareholders immediately supported and continue to support through lockup agreements, including two prominent Saskatchewan -based investment funds. We had hoped to make this a friendly and collaborative process, but Mr. Zettl refuses to even pick up the phone or return our calls to have a discussion.”


Debra BorchardtDebra BorchardtNovember 24, 2017
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Canadian-based Aurora Cannabis Inc. (ACBFF)  has gone a spending spree as the company continues to make acquisitions. Yesterday, while all of us Americans were bonding over turkey, Aurora announced it had entered into a binding share purchase agreement to acquire H2 Biopharma Inc.

The Lachute, Quebec-based H2 is currently completing a purpose-built 48,000 square foot cannabis production facility, less than an hour from Montreal, and near the Pierre-Elliott Trudeau International Airport. The Lachute Facility is expected to be completed by the end of the year and is projected to produce 4,500 kilograms of high-quality cannabis per year. The facility is located on 46 acres of land, which H2 has the right to acquire for $136,000. The Lachute facility has access to ample low-cost power, water and infrastructure to support a very significant capacity expansion – up to or beyond the scale of the Company’s 800,000 square foot Aurora Sky facility, currently under construction near Edmonton International Airport.

“This is another outstanding transaction that further extends Aurora’s lead in establishing advanced-technology, ultra-efficient, low-cost production via purpose-built facilities,” said Terry Booth, CEO. “The Lachute Facility, which is 80% complete and has the land and utilities required for significant additional expansion, is fully consistent with the Aurora Standard and will be instrumental in delivering high-quality products for the Quebec, Canadian and overseas markets.”

This latest Aurora acquisition will be the Company’s fourth production facility in Canada – and the second site in Quebec, in addition to its 40,000 square foot production “Aurora Vie” facility in Pointe-Claire, on the island of Montreal.

Larssen Acquisition

Aurora also announced that it has signed a definitive agreement for the acquisition of 100% of the issued and outstanding shares of Larssen Ltd., a Canadian company that has consulted on the design, engineering, and construction oversight of many greenhouse cultivation facilities.  Larssen will be integrated into a newly incorporated subsidiary, Aurora Larssen Projects Ltd. and will focus on providing a turn-key service offering to Aurora and its domestic and international partners.

Booth added, “The acquisition of Larssen is an immediately accretive, high-margin revenue generating opportunity that also extends our technological leadership in the cannabis sector. We know Thomas and his team very well, as they have been instrumental in the design and engineering of our revolutionary Aurora Sky facility. This will help make the integration of Larssen with Aurora seamless. The establishment of ALPS will add significant capacity to our project execution team, enabling us to further accelerate the expansion of our global presence.”

Hempco Deal Completed

Aurora Cannabis announced that it has completed a non-brokered private placement with Hempco Food and Fiber Inc. for gross proceeds of $3.2 million that was originally announced in September. In relation to the placement, Hempco issued 10,558,676 units, at $0.3075 per unit, to Aurora. According to the company statement, “Each unit consists of one Hempco common share and one non-transferable common share purchase warrant. Each Warrant entitles Aurora to purchase one additional Hempco Share at a price of $0.41 until the second anniversary of the closing date. Each Warrant includes an acceleration clause, providing that if at any time beginning four months and one day after the date the warrant was issued the volume weighted average price per Hempco share on the TSX Venture Exchange (“TSXV”) exceeds $0.65 for a period of 30 consecutive calendar days, Hempco will have a limited right to accelerate the expiration date of the Warrants.”

This all comes as Aurora formally launched its hostile takeover bid for CanniMed Therapeutics. CanniMed had said earlier that while Aurora had expressed interest in a takeover, it hadn’t received a formal request. Aurora disputed that, but today issued a statement saying, “Notice and advertisement of the Offer was placed in the November 24, 2017 edition of the Globe & Mail, and a takeover bid circular will be mailed to CanniMed shareholders. In addition, Aurora will file the offer and takeover bid circular and related documents on SEDAR. The Offer Documents will also be available on Aurora’s website at www.auroramj.com and shareholders are invited to visit cannimed.auroramj.com for further information.”

 


Debra BorchardtDebra BorchardtNovember 20, 2017
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Aurora Cannabis Inc. (ACBFF) is taking its hostile takeover of CanniMed Therapeutics (CMMDF) to the shareholders after being ignored by the CanniMed board. Aurora is offering C$24.00 per CanniMed share for a 56.9% premium over the closing price before Aurora began its takeover attempt. Aurora says it has locked up three of the company’s largest shareholders representing 38% of the company’s shares.

The CanniMed shareholders don’t exactly receive C$24 per share, instead, they would get 4.52586207 Aurora shares for each of their CanniMed shares. This valuation is based on Aurora’s closing share price on November 17, 2017. Aurora’s stock is down from a 52-week high of C$6.90 and the stock has fallen since the announcement of the desire to acquire CanniMed. CanniMed’s stock popped from the C$15 range prior to the takeover announcement to lately trading at approximately C$19.32.

“While we have attempted to engage and have a constructive dialogue with CanniMed’s Board and management about the strong merits of our offer, their refusal to enter into such a discussion, along with the powerful strategic rationale for the combination, leaves us no recourse at this point but to launch a formal offer for the company,” said Terry Booth, CEO of Aurora. “We believe that CanniMed shareholders would benefit greatly from a combination, not only through the very significant premium we are offering for their shares, but also by participating in Aurora’s continued growth, which is well above our industry peers, and is based on superior business strategy and exceptional, industry-leading execution. We already have the support of a large percentage of CanniMed shareholders, and look forward to bringing this process to a positive conclusion for the benefit of our combined shareholders.”

The move began on November 13, when Aurora contacted the board of directors at CanniMed to propose a merger. According to Aurora, the board failed to respond by the proposed deadline and so Aurora decided to approach the shareholders directly.

CanniMed Fires Back With Its Own Merger Plans

CanniMed decided instead to announce a merger with Newstrike Resources, the parent company of Up Cannabis Inc. on the 17th of November. Under this agreement, Newstrike shareholders would receive 0.033 shares of CanniMed for each Newstrike share for a value of approximately C$0.505 per share. Following the deal, Newstrike would become a wholly-owned subsidiary of CanniMed.

The board of CanniMed is urging shareholders to vote in favor of the Newstrike deal, while stating on November 15th that Aurora had not made a formal offer for the CanniMed shares. They said to take no action on the unsolicited proposal. In a statement, the company said, “The Newstrike acquisition is accretive and is a highly strategic entry into the recreational cannabis market and the terms of any Aurora offer are unknown, whereas the transaction with Newstrike has been fully negotiated and contains only reasonable conditions to closing. CanniMed will respond to the Aurora proposal if a formal offer is made.”

Aurora countered in its statement, “In entering into the highly conditional agreement, CanniMed has agreed to pay a $9.5 million termination fee to Newstrike Resources should a superior proposal, such as the Aurora Offer, emerge. The termination fee, if paid, represents approximately $0.41 cash per share loss to CanniMed shareholders.” Aurora also fired back that the terms of the offer were in fact known as it gave detailed terms to the board in a proposal dated November 13. They argue that the Newstrike deal is oppressive to CanniMed shareholders. However, Aurora does concede in its statement that it has not commenced the offer, only made its intention to do so and could potentially not move forward. Aurora is working with Canaccord Genuity on the deal.

Board Member Resigns Ahead Of Conference Call

In addition to the news of the Newstrike merger, CanniMed also announced on Monday that Mr. Rob Duguid has resigned from the Board of Directors. He had been a board member since 2001. CanniMed is also hosting a conference call to discuss these matters on Monday at 10:00 am eastern.



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