A U.S.-based cannabis company, Curaleaf Holdings Inc., has expressed interest in acquiring Aurora Cannabis Inc., a company headquartered in Edmonton. Aurora has disclosed the formation of a special committee to evaluate the unsolicited bid from Curaleaf, following an announcement made by Curaleaf about its intentions to acquire all shares of Aurora.
Should the acquisition be successful, it would result in the formation of a combined cannabis entity operating in 17 countries across Europe, North America, and various global markets, according to Curaleaf. The Stamford, Connecticut-headquartered company, listed on the Toronto Stock Exchange, has decided to make its bid public after unsuccessful private negotiation attempts with Aurora’s leadership.
Curaleaf reported that despite sending a formal letter of intent to Aurora on June 23 and a subsequent follow-up letter on July 7, Aurora’s board declined to engage in discussions regarding the proposed acquisition. Curaleaf’s CEO, Boris Jordan, expressed disappointment over Aurora’s lack of engagement and stated the company’s readiness to directly engage with Aurora shareholders to push for the deal.
Curaleaf has proposed a payment of $4 US per share to Aurora shareholders, alongside an additional $0.75 US in cash for each Aurora share. Aurora confirmed receipt of the letters from Curaleaf but disputed the claim that it had rejected engagement with the offer. The Canadian company asserted that its independent director had communicated with Curaleaf’s CEO as recently as July 24, expressing a focus on executing its business plan while remaining open to ongoing dialogue with Curaleaf.
Aurora will be establishing a special committee comprising independent directors to evaluate the proposal’s alignment with stakeholder interests. However, the company emphasized that there is no guarantee of a deal being finalized, and it will continue its regular operations in the meantime.
While recognizing Curaleaf’s interest in the acquisition, analysts from TD Cowen expressed the opinion that the current offer undervalues Aurora’s long-term potential. They highlighted Aurora’s market leadership, product portfolio, financial strength, and regulatory expertise as factors that could lead to significant future value creation.
Boris Jordan of Curaleaf emphasized the potential value creation through merging the companies, citing the combination of Curaleaf’s global distribution network with Aurora’s international medical cannabis presence and production capabilities. The companies collectively generated over $1.5 billion US in revenue in the past year, with Curaleaf anticipating annual cost synergies of at least $40 million US from the proposed acquisition.
Jordan stated that the merger offers a mutually beneficial opportunity for shareholders of both Curaleaf and Aurora, allowing Aurora shareholders to access a more diversified global platform and benefit from favorable U.S. regulatory developments.