TORONTO -- Aurora Cannabis Inc. is pushing ahead with plans for an all-stock takeover offer for CanniMed Therapeutics Inc. after failing to reach an agreement with the company's board.
The company proposed the deal last week and gave the CanniMed board until Friday to respond. However, Aurora said Monday morning that the board has not replied and it would go ahead with its bid which it valued at $24 per CanniMed share.
"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," Aurora CEO Terry Booth said in a statement.
Aurora (TSX:ACB) said it has agreements with shareholders representing 38 per cent of CanniMed's outstanding shares to support its bid.
The offer follows an announcement by CanniMed on Friday that it struck an all-stock to deal to acquire marijuana company Newstrike Resources Ltd.
Under the Newstrike deal, shareholders of the company (TSXV:HIP) will receive 0.033 CanniMed shares (TSX:CMED) for each Newstrike share held. The companies valued the offer at 50.5 cents per share, based on CanniMed's share price on Nov. 14 before it disclosed it was in talks to acquire Newstrike, which is backed by the Tragically Hip.
CanniMed shareholders would own approximately 65 per cent of the combined company, while Newstrike shareholders would hold the remaining 35 per cent.
Aurora called CanniMed's acquisition announcement "extremely troubling" in light of its offer presented to CanniMed's board on Nov. 13.
"At no point did CanniMed try to engage or otherwise entertain discussions with Aurora regarding the significant offer that had been presented to their Board for CanniMed shareholders prior to entering into the Newstrike Resources agreement," the company said.
The Newstrike offer "should be considered oppressive to CanniMed shareholders," it added.
The transaction is subject to approval from shareholders of both companies during special meetings.
CanniMed president and chief executive Brent Zettl said Monday that Newstrike is "our optimal partner" as it looks to participate in the recreational marijuana market, with the July 2018 deadline set by the federal government for its legalization rapidly approaching.
Zettl, who would not speak about Aurora during its conference call to discuss the Newstrike transaction, said this was CanniMed's "initial step" to broaden beyond medicinal cannabis.
"We are bringing on board an iconic, recognized brand associated with The Tragically Hip that will have a definite place in the recreational market," he said.
Shares of Aurora were up nearly 4 per cent in morning trading, at $5.72 in Toronto while shares of CanniMed were up 4.71 per cent at $20.23.
