Takeover Archives - Green Market Report

Debra 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 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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