Aurora Cannabis Inc. is contemplating an offer from a U.S. cannabis company seeking to acquire the Edmonton-based firm. The company announced the formation of a special committee to review the unsolicited bid shortly after Curaleaf Holdings Inc. disclosed its intention to acquire all shares of Aurora.
If successful, this acquisition would result in a combined cannabis entity operating in 17 countries across Europe, North America, and other global markets, according to Curaleaf. The Connecticut-based company, listed on the Toronto Stock Exchange, decided to go public with its proposal after unsuccessful attempts to negotiate privately with Aurora’s leadership.
Curaleaf stated that despite sending a formal letter of intent on June 23 and a follow-up letter on July 7 outlining their proposal, Aurora’s board declined to engage in discussions. Boris Jordan, Curaleaf’s CEO, expressed disappointment at Aurora’s lack of engagement and emphasized the significance of the premium and strategic rationale behind the offer.
Curaleaf proposed paying Aurora shareholders $4 US per share, along with an additional $0.75 US in cash for each Aurora share. In response, Aurora confirmed receipt of the letters from Curaleaf but disputed the claim that they refused to engage with the offer.
Aurora clarified that its lead independent director had been in correspondence with Curaleaf’s CEO as recently as July 24, indicating a willingness to maintain dialogue. The company will establish a special committee of independent directors to evaluate the proposal’s alignment with stakeholders’ interests.
While acknowledging Curaleaf’s interest, analysts from TD Cowen expressed reservations about the offer, believing it undervalues Aurora’s long-term potential. They highlighted Aurora’s market leadership, product portfolio, financial strength, and regulatory expertise as factors contributing to its intrinsic value.
Jordan emphasized the value creation potential of merging the companies, citing the synergy between Curaleaf’s global distribution network and Aurora’s medical cannabis franchise. The combined revenue of both companies exceeded $1.5 billion US in the last 12 months, with Curaleaf anticipating annual cost synergies of at least $40 million US post-acquisition.
In conclusion, Jordan sees the merger as mutually beneficial for Curaleaf and Aurora shareholders, offering an opportunity to leverage a diversified global platform and capitalize on U.S. regulatory developments.