- Offer currently valued at $24.00 per CanniMed share
- 56.9% premium to CanniMed closing price prior to Aurora's
takeover proposal announcement
- Lockup agreements already in place with shareholders holding
38% of CanniMed shares, including CanniMed's 3 largest
shareholders
TSX:ACB
VANCOUVER, Nov. 24, 2017 /CNW/ - Aurora Cannabis Inc.
(the "Company" or "Aurora") (TSX: ACB) announced
today that, further to its press release of November 17, 2017, it has formally commenced its
offer (the "Offer") to purchase all of the issued and
outstanding common shares (the "CanniMed Shares") of
CanniMed Therapeutics Inc. ("CanniMed") (TSX: CMED) for
consideration consisting of common shares of Aurora (the "Aurora
Shares").
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 (the "Offer
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.
The price being offered by Aurora for each CanniMed Share, which
would currently be equivalent to the Cap Price (as such term is
defined below) of $24.00 payable in
Aurora Shares given Aurora's closing share price of $6.42 on November 22,
2017, represents a compelling premium of 56.9% over the
closing price of CanniMed Shares on November
14, 2017 (the last day prior to the public disclosure of
Aurora's intention to pursue a combination with CanniMed), and a
74.7% premium over the volume weighted average price
("VWAP") for CanniMed Shares for the last 20 trading days
ended November 14, 2017.
Terms of the Offer
The Offer will provide holders of CanniMed Shares with
4.52586207 Aurora Shares for each CanniMed Share, subject to a
maximum of $24.00 (the "Cap
Price") in Aurora Shares. If, on the earlier of the expiry time
of the Offer and the date on which all conditions to the Offer have
been satisfied, the 20-day volume weighted average price (the
"Calculation Date VWAP") of Aurora Shares traded on
the TSX is greater than $5.30 per
Aurora Share, the number of Aurora
Shares that a holder of CanniMed Shares will receive will be
calculated by dividing the Cap Price of $24.00 by the Calculation Date VWAP.
The Offer will be remain open for acceptance until 11:59 p.m. (Pacific time) on March 9, 2018. Subject to applicable securities
laws, the deposit period may be extended, or in certain
circumstances reduced, by Aurora. In light of CanniMed's proposed
alternative transaction with Newstrike Resources Ltd. (the
"Newstrike Resources Alternative Transaction"), Aurora has
applied to the Financial and Consumer Affairs Authority of
Saskatchewan and the Ontario
Securities Commission to obtain an order reducing the minimum
deposit period for the Offer in order to allow CanniMed's
shareholders to consider the Offer concurrently with the Newstrike
Resources Alternative Transaction. CanniMed shareholders are
advised, however, that there is no assurance such relief will be
obtained.
Compelling Strategic Rationale for the Aurora-CanniMed
Combination
Aurora continues to believe that the combination of the two
companies is extremely compelling, in the best interest of both
CanniMed's and Aurora's shareholders, and will accelerate growth
and shareholder value creation for the combined entity, further
extending Aurora's leadership position within the global cannabis
sector.
"We are excited to be able to present this offer to CanniMed's
shareholders. We are confident that they will find the significant
premium we are offering on CanniMed's shares is highly attractive,
and is amplified by the opportunity to participate in the growth of
the combined company through Aurora's common shares," said
Terry Booth, CEO of Aurora. "Our
ability to unlock value is one of the driving forces behind our
offer, as we believe that we will be able to accelerate CanniMed's
growth more effectively than current management, and so we invite
and encourage CanniMed's shareholders to tender their shares to the
bid."
By combining with Aurora, CanniMed will be able to leverage
certain of Aurora's strengths to expand its business. The combined
company will have an expanded geographic footprint, increased
production capacity, an expanded product portfolio and other
synergistic benefits, such as:
- Increased Oil Production. High throughput oil production
through Aurora's strategic extraction partner, Radient Technologies
Inc., to satisfy growing international demand;
- CanvasRx. Aurora's wholly owned subsidiary, CanvasRx
Inc., is the industry leading physician education and patient
counselling services company, having helped over 35,000 patients
register with licensed producers;
- Accelerated Growth Through Innovation. CanniMed
will be able to leverage Aurora's sector leadership in execution,
technology integration and innovation for the purpose of
accelerating development and growth potential;
- eCommerce. CanniMed will have access to Aurora's
e-commerce platform, including the only mobile app in Canada that enables customer purchases;
- Same Day Delivery. CanniMed will have access to
Aurora's same-day delivery capabilities; and
- Strong Cash Position and Balance Sheet to Support Additional
Growth. Aurora`s sector-leading cash position and
balance sheet will enable faster roll-out of initiatives for
CanniMed to accelerate growth.
In addition to Aurora's standalone strengths, which can be
leveraged to build CanniMed's brand and revenues, a combined
Aurora-CanniMed would have:
- Over 130,000 kg of Funded Capacity. Funded capacity of
over 130,000 kilograms of annual production (including both current
facilities and facilities under construction), with significant
additional capacity planned and funded;
- Expanded International Presence – A strengthened
international presence with operations and agreements across
North America, the European Union,
Australia, South Africa, and the Cayman Islands;
- 6 State-of-the-Art Facilities. Significant cultivation
capacity with six state-of-the-art facilities;
- Increased Export Capacity. Multiple EU GMP-compliant
production facilities and significantly increased export
capacity;
- Genetics. Expansion of both companies' portfolio of
genetics;
- Broader Product Portfolio. The combination of each
company's product lines will broaden the number of product
offerings, delivery mechanisms, and devices;
- Strategic Product Synergies. Complementary product
offerings which will provide better opportunities for market
penetration in new sectors; and
- Improved Yields. Expected enhanced production yields and
product quality through cross-application of proprietary
technologies and intellectual property from each of Aurora and
CanniMed.
Reasons to Tender to the Aurora-CanniMed Combination
Among other reasons, CanniMed's shareholders are encouraged to
tender their shares to the Offer because:
- Receive a Premium vs. Pay a
Premium. The Offer provides CanniMed Shareholders the
opportunity to receive a 56.9% premium over the closing price of
CanniMed Shares on November 14, 2017,
the last day prior to the public disclosure of Aurora's intention
to pursue a combination with CanniMed, and a 74.7% premium over the
VWAP over the last twenty trading days ended on November 14, 2017. In contrast, the Newstrike
Resources Alternative Transaction has CanniMed Shareholders paying
a 26% premium to the Newstrike closing price as at November 6, 2017, the last day prior to market
speculation in Newstrike shares.
- High Likelihood of Completion. Aurora believes that
there is a high likelihood that more than 66 2/3% of the
outstanding shares will be tendered to the Offer, and therefore the
Offer will be successful, given that the Offer is already supported
by 38% of CanniMed Shareholders (the "Locked-Up
Shareholders").
- Support of Major Shareholders. The Locked-up
Shareholders include CanniMed's three largest shareholders, which
represent 38% of CanniMed Shares. The Locked-up Shareholders have
already agreed to tender their shares in favour of the Offer and
are precluded from tendering any of their common shares in favour
of any other competing acquisition proposal relating to
CanniMed.
- Potential for Downward Share Price Impact if Offer is Not
Accepted. The Offer represents a significant premium to
the market price of CanniMed Shares prior to the public
announcement of Aurora's interest to acquire CanniMed. Given the
Lock-Up Agreements, Aurora believes it will be extremely difficult
for CanniMed to proceed with an alternative competing transaction
to the Offer. If the Offer is not successful and no competing
transaction is made, Aurora believes the trading price of CanniMed
shares may decline to pre-Offer levels.
- Continued Participation with an Industry Leader. Aurora
has rapidly become a globally significant cannabis company with a
proven track record of exceptional shareholder value creation.
Since receiving its first license to cultivate from Health Canada
in February 2015, Aurora has
completed a number of acquisitions and investments, completed
capital programs to expand facilities, and developed marketing and
delivery capabilities, demonstrating an ability to be agile,
innovative and execute its business plans. The Offer provides
CanniMed shareholders the opportunity to continue to participate in
the compelling industry growth alongside the established and
successful track record of Aurora.
- Increased Scale, Capital Markets Presence and Access to
Capital. The pro forma combined company would have, based
on the current trading price of the Aurora Shares, a market
capitalization approaching $3.5
billion, in addition to significantly enhanced liquidity
relative to CanniMed, providing greater access to capital. Aurora
has cash of more than $180 million
(increasing to $340 million upon
completion of its current capital initiatives), relative to only
$54 million for CanniMed based on its
most recent quarterly financial statements. Aurora's capitalization
makes it well positioned to continue pursuing its aggressive global
expansion and differentiation strategy.
Conditions of the Offer
The Offer is subject to a number of customary conditions,
including: (i) there being deposited under the Offer, and not
withdrawn, at least 66⅔% of the outstanding CanniMed Shares
(calculated on a fully diluted basis), excluding any CanniMed
Shares held by Aurora; (ii) the proposed acquisition of Newstrike
Resources Inc. announced by CanniMed in its new release of
November 17, 2017 shall not have
proceeded, and shall have been terminated; (iii) receipt of all
governmental, regulatory and third party approvals that Aurora
considers necessary or desirable in connection with the Offer; (iv)
no material adverse change having occurred in the business,
affairs, prospects or assets of CanniMed; and (v) the minimum
tender and other conditions set out in National Instrument 62-104
Take-Over Bids and Issuer Bids. In addition, in accordance
with the policies of the TSX, Aurora requires the approval of its
shareholders to issue the Aurora Shares to be distributed by it in
connection with the Offer. Aurora will call a meeting of its
shareholders to consider a resolution to approve the issuance of
Aurora Shares in connection with the Offer in early 2018.
Acknowledgement of CanniMed Special Committee
Aurora acknowledges that, as announced in a press release on
November 22, 2017, the Board of
Directors of CanniMed has formed a Special Committee to review the
Offer, and Aurora remains open to a dialogue whereby the parties
can work toward a constructive, mutually agreeable transaction in a
timely manner.
"The initial decision of CanniMed not to explore our proposal
was unfortunate." said Ronan Levy,
Aurora's Vice President of Business and Corporate Affairs.
"However, we are hopeful that CanniMed's Special Committee will
see, as we do, that the financial and strategic rationales for a
combination with Aurora are compelling, and that the transaction is
in the best interests of CanniMed's shareholders. We remain
available for productive conversations with the Special Committee
such that the benefits of the combination can begin to be realized
by the shareholders of both of our companies as soon as
possible."
Advisors
Aurora has retained Canaccord Genuity Corp. as its financial
advisor in connection with the Offer. McMillan LLP is acting as the
legal advisor to Aurora for the Offer. Laurel Hill Advisory Group
has also been retained by Aurora as its Depositary and Information
Agent in connection with the Offer. Shareholders with
questions regarding Aurora's Offer can contact Laurel Hill at 1-877-452-7184 (or
+1-416-304-0211 – collect call for shareholders outside
North America).
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health
Canada's Access to Cannabis for Medical Purposes Regulations
("ACMPR"). The Company operates a 55,200 square foot,
state-of-the-art production facility in Mountain View County,
Alberta, known as "Aurora
Mountain", a second 40,000 square foot high-technology production
facility known as "Aurora Vie" in Pointe-Claire, Quebec on Montreal's West Island, and is currently
constructing an 800,000 square foot production facility, known as
"Aurora Sky", at the Edmonton
International Airport.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction
technology company Radient Technologies Inc., based in Edmonton, and is in the process of completing
an investment in Edmonton-based
Hempco Food and Fiber for an ownership stake of up to 50.1%.
Furthermore, Aurora is the cornerstone investor with a 19.9% stake
in Cann Group Limited, the first Australian company licensed to
conduct research on and cultivate medical cannabis. Aurora also
owns Pedanios, a leading wholesale importer, exporter, and
distributor of medical cannabis in the European Union, based in
Germany. The Company offers
further differentiation through its acquisition of BC Northern
Lights Ltd. and Urban Cultivator Inc., industry leaders,
respectively, in the production and sale of proprietary systems for
the safe, efficient and high-yield indoor cultivation of cannabis,
and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home
and professional kitchens. Aurora's common shares trade on the TSX
under the symbol "ACB".
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
SHAREHOLDER QUESTIONS
Questions may be directed to Aurora's Depositary and Information
Agent at:
Laurel Hill Advisory Group
North America Toll Free: 1-877-452-7184
Collect Calls Outside North America: 1-416-304-0211
Email: assistance@laurelhill.com
This news release contains certain "forward-looking
statements" within the meaning of such statements under applicable
securities law. Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "may",
"will", "potential", "proposed" and other similar words, or
statements that certain events or conditions "may" or "will" occur.
These statements are only predictions. Forward looking statements
in release include statements regarding the proposed terms of the
business combination of Aurora with CanniMed (the "Combination"),
the timing or potential for discussions regarding the Combination,
the expected benefits of the Combination, and the anticipated
market capitalization of the combined entity. Various assumptions
were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news
release, including assumptions based upon CanniMed's publicly
disclosed information, and that there will be no change in the
business, prospects or capitalization of CanniMed or Aurora.
Forward-looking statements include, but are not limited to, the
successful completion of the Offering and the use of proceeds of
the Offering and the Company's intention to continue international
and domestic expansion. Forward-looking statements are based on the
opinions and estimates of management at the date the statements are
made and the accuracy and completeness of publicly available
information regarding CanniMed, and are subject to a variety of
risks and uncertainties and other factors that could cause actual
events or results to differ materially from those projected in the
forward-looking statements. The Company is under no obligation, and
expressly disclaims any intention or obligation, to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as expressly
required by applicable law. A more complete discussion of the risks
and uncertainties facing the Company appears in the Company's
Annual Information Form and continuous disclosure filings, which
are available at www.sedar.com.
In particular, this News Release contains forward-looking
information concerning:
(i)
|
the Offer, various
terms of the Offer and the anticipated timing of completion of the
Offer;
|
(ii)
|
expectations with
respect to synergies and efficiencies that may be achieved upon a
combination of the businesses of Aurora and CanniMed and other
benefits of a combination of the businesses of Aurora and CanniMed;
and
|
(iii)
|
expectations with
respect to business and geographical diversification of the
combined entity.
|
Readers are cautioned not to place undue reliance on forward
looking statements.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this
release.
Cautionary Statement Respecting CanniMed Information
The information concerning CanniMed contained in this News
Release has been taken from, or is based upon, publicly available
information filed by CanniMed with securities regulatory
authorities in Canada prior to the
date of this News Release and other public sources. CanniMed has
not reviewed this News Release and has not confirmed the accuracy
and completeness of the CanniMed information contained herein.
Neither Aurora, nor any of the officers or directors of Aurora,
assumes any responsibility for the accuracy or completeness of such
CanniMed information or any failure by CanniMed to disclose events
or facts that may have occurred, or which may affect the
significance or accuracy of any such CanniMed information, but
which are unknown to Aurora. Aurora has no means of verifying the
accuracy or completeness of any of the CanniMed information
contained in this News Release or whether there has been a failure
by CanniMed to disclose events or facts that may have occurred or
may affect the significance or accuracy of any such
information.
Notice to U.S. Holders
The Offer will be made for the securities of a company formed
outside of the United States. The
Offer will be subject to disclosure requirements of Canada that are different from those of the
United States. Financial statements included in the
documents, if any, will be prepared in accordance with Canadian
accounting standards and may not be comparable to the financial
statements of United States
companies.
It may be difficult for a securityholder in the United States to enforce his/her/its
rights and any claim a securityholder may have arising under the
U.S. federal securities laws, since the issuer is located in
Canada, and some or all of its
officers or directors may be residents of Canada or another country outside of
the United States. A
securityholder may not be able to sue a Canadian company or its
officers or directors in a court in Canada or elsewhere outside of the United States for violations of U.S.
securities laws. It may be difficult to compel a Canadian company
and its affiliates to subject themselves to a U.S. court's
judgment.
Securityholders should be aware that the issuer may purchase
securities otherwise than under the Offer, such as in open market
purchases.
SOURCE Aurora Cannabis Inc.