Aurora Cannabis Inc. has expressed openness to consider an acquisition bid from a U.S. cannabis company aiming to take over the Edmonton-based company. The announcement of forming a special committee to review the unsolicited offer came shortly after Curaleaf Holdings Inc. disclosed 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 other global markets, according to Curaleaf. The Connecticut-based firm, listed on the Toronto Stock Exchange, cited unsuccessful private negotiation attempts with Aurora’s leadership as the reason for publicly proposing the deal.
Curaleaf mentioned that Aurora’s board declined to engage in discussions following the formal bid submission by Curaleaf’s CEO, Boris Jordan, on June 23. Despite a subsequent follow-up letter sent on July 7, Aurora allegedly remained unresponsive to constructive talks, prompting Curaleaf to address Aurora shareholders directly.
In response, Jordan expressed disappointment at Aurora’s lack of engagement, emphasizing the substantial premium and strategic benefits of the proposed merger. Curaleaf remains open to collaborating with Aurora’s board to finalize the transaction swiftly.
Curaleaf outlined a proposal to offer Aurora shareholders $4 US per share plus an additional $0.75 US in cash for each share. Aurora acknowledged receiving the bid letters but refuted Curaleaf’s claim of refusal to engage, stating ongoing communication between the companies’ representatives as recently as July 24.
Aurora is now establishing a special committee of independent directors to evaluate the offer’s alignment with stakeholders’ interests, with no assurance of a deal outcome. Meanwhile, the company will maintain its regular operations during the deliberation period.
Although acknowledging Curaleaf’s interest positively, industry analysts at TD Cowen believe that the current bid undervalues Aurora’s long-term business potential. They highlighted Aurora’s market leadership, product quality, financial strength, and regulatory expertise as factors indicating higher intrinsic value over time.
Jordan emphasized the potential value creation through the merger, citing the synergy between Curaleaf’s global distribution network and Aurora’s established international medical cannabis operations. The combined revenue of over $1.5 billion US in the last year and projected annual cost savings of $40 million US further supported the strategic rationale behind the proposed acquisition.
The merger proposition aims to provide Aurora shareholders with enhanced exposure to global markets and regulatory opportunities, reflecting a mutually beneficial outcome for both companies, as per Jordan’s statement.