This amended and restated news release is being issued pursuant
to the orders (the "Orders"), dated December
22, 2017, of the Ontario Securities Commission (the "OSC")
and the Financial and Consumer Affairs Authority of Saskatchewan (the "FCAAS" and together with
the OSC the "Securities Regulators"). In the section below entitled
"Background to the Proposal", Aurora provides further information
in response to the following disclosure required by the Orders of
the Securities Regulators:
- The circumstances under which, and the means by which, Aurora
became aware that the board of CanniMed Therapeutics Inc.
would be meeting on November 13,
2017 to, among other things, consider for approval an
arrangement agreement entered into between CanniMed Therapeutics
Inc. and Newstrike Resources Limited.
- Other information that was: (i) obtained directly or indirectly
by Aurora from any person who is, or was at the relevant time, in a
special relationship with CanniMed Therapeutics Inc. (by reference
to the definitions in subsection 76(5) of the Securities Act
(Ontario) and clause 85(1)(a) of
the Securities Act (Saskatchewan)); and (ii) material to Aurora in
structuring, determining the timing of, delivering or implementing
the Aurora Offer.
- Other information within Aurora's knowledge that would
reasonably be expected to affect the decision of the security
holders of CanniMed Therapeutics Inc. to accept or reject the offer
made by the Aurora Offer.
VANCOUVER, Jan. 12, 2017
/CNW/ - The information under the new heading "Background to the
Proposal" has been added as of January 12,
2018 notwithstanding that the remainder of this news release
is as at November 14, 2017 and
discloses no new information. The information included under the
heading "Background to the Proposal" has been derived from the
information provided by Aurora at the hearings to the OSC and the
FCAAS which is publicly available upon request to the OSC, and has
been made available separately by Aurora. At the request of
IIROC, Aurora Cannabis Inc. (TSX: ACB) ("Aurora") announced
today that it has submitted a proposal (the "Proposal") to
acquire all of the issued and outstanding common shares of CanniMed
Therapeutics Inc. (TSX: CMED) ("CanniMed"). The proposal was
delivered to the Board of Directors of CanniMed on November 13, 2017 and Aurora is seeking to pursue
a mutually agreed upon combination with CanniMed. CanniMed has not
yet engaged in active discussions with Aurora, however, Aurora
welcomes the opportunity to do so, such that CanniMed's
shareholders can benefit from the significant inherent value in the
Proposal. Aurora has requested that CanniMed's Board respond
to the Proposal prior to 5:00 pm
(Vancouver time) on Friday November 17, 2017, failing which, Aurora
intends to commence a formal takeover bid for CanniMed.
Transaction Highlights
- All-share Proposal, valued at $24.00 per CanniMed share based on the closing
share price of Aurora on November 14,
2017, reflects a 56.9% premium over the most recent closing
price of CanniMed shares on November 14,
2017
- Irrevocable lock-up agreements with approximately 38% of
CanniMed shareholders to vote in favour of Aurora's proposal or
tender to Aurora's bid
- The combination would create a global leader in the cannabis
industry with a pro-forma market capitalization exceeding
$3.0 billion
- Combined entity would serve approximately 40,000 active
registered patients
- Aurora – CanniMed combined would benefit from enhanced capacity
for future growth with greater access to capital and liquidity,
with trading volumes amongst the highest in the cannabis
industry
Pursuant to the Proposal, CanniMed shareholders will be entitled
to receive a maximum of $24 per
CanniMed share or 4.52586207 Aurora shares, based on the 20-day
volume weighted average price of Aurora. Based on the closing price
of Aurora shares on November 14,
2017, this translates to 3.74415 Aurora shares for each
CanniMed share. Based on the closing prices of Aurora and CanniMed
on November 14, 2017, this represents
a premium of approximately 56.9% premium over the closing price of
CanniMed shares on November 14, 2017
and a 74.7% premium over the 20-day volume weighted average price
for the period ended November 14,
2017. Upon completion of the transactions contemplated by
the Proposal, based on the closing prices of November 14, 2017, CanniMed's shareholders will
hold approximately 16% of the issued and outstanding shares of
Aurora.
"Aurora and CanniMed are a great fit, truly complementary, and I
am convinced we can generate even greater value by combining the
two companies and aligning our efforts strategically," said
Terry Booth, CEO. "Aurora has the
management expertise, capital markets strength, distribution
channels, brand power and growth prospects to successfully
integrate CanniMed into Aurora - the fastest-growing cannabis
company with the sector's most exceptional execution track
record."
Lock-Up of Shareholders of CanniMed
In connection with the proposal, Aurora has entered into
irrevocable lock-up agreements in support of its proposal from
shareholders representing approximately 38% of CanniMed's
outstanding shares. Under the lock-up agreements, the locked-up
shareholders are precluded from tendering or voting any of their
CanniMed common shares in favour of any other acquisition proposal
relating to CanniMed and are required to vote against other
acquisition proposals or actions which might prevent, delay or
frustrate Aurora's proposal.
Compelling Strategic Rationale
Aurora believes the value that would result from the combination
of the two companies is substantial. Together, their unique and
complementary strengths would drive value, create the leading
cannabis company across multiple markets, and the combined entity
will lower production costs while connecting consumers via market
leading brands. Among other things, the combined entity will:
- have a combined total of over 40,000 active registered cannabis
patients in Canada;
- have significant cultivation capacity with five
state-of-the-art facilities, and additional facilities
planned;
- have existing or funded capacity of over 130,000 kilograms of
annual production with significant additional capacity
planned;
- further strengthen both companies' international presence with
operations and agreements in the European Union, Australia and the Cayman Islands;
- increase the capacity to reach and service a wider
international patient base with a broader product offering;
- improve yields through cross-application of proprietary
technologies from each of Aurora and CanniMed;
- provide CanniMed with access to Aurora's network of strategic
partners, such as extraction technology leader Radient
Technologies;
- enable CanniMed to leverage Aurora's sector leadership in
innovation to accelerate development;
- expand both companies' portfolio of genetics; and
- enable CanniMed to leverage Aurora's unparalleled e-commerce
platform, including the only mobile app in Canada that enables customer purchases.
Background to the Proposal
As detailed in the notice of change dated January 12, 2018 (available on www.sedar.com),
Aurora provides the following information as required by the
Orders. The information under the new heading "Background to the
Proposal" has been added as of January 12,
2018 notwithstanding that the remainder of this news release
is as at November 14, 2017
1. The circumstances under which, and the means by
which, Aurora became aware that the board of CanniMed would be
meeting on November 13, 2017 to,
among other things, consider for approval an arrangement agreement
entered into between CanniMed and Newstrike Resources
Limited.
Aurora was not aware that CanniMed was considering a transaction
with Newstrike Resources Ltd. ("Newstrike") until CanniMed
announced its discussions with Newstrike on November 15, 2017. However, in the course
of negotiations with Vantage Asset Management ("Vantage"),
Saskworks Venture Fund Inc. ("Saskworks"), Apex Investments
Limited Partnership ("Apex") and Golden Opportunities Fund
Inc. ("Golden") (collectively, the "Locked-Up
Shareholders"), who each entered into lock-up agreements (the
"Lock-Up Agreements"), Aurora did become aware that the
CanniMed Board of Directors was meeting on November 13, 2017 to consider a transaction as
outlined below.
On November 6, 2017, Mark Tredgett, the Managing Partner of Vantage,
contacted Mr. Joseph del Moral, a director of Aurora, to discuss
the state of the cannabis industry and the business and affairs of
Aurora in general. During the course of that conversation, Mr.
Tredgett advised Mr. del Moral that Vantage held approximately
2,000,000 CanniMed shares, and that Vantage would be prepared to
support an offer from Aurora for the outstanding CanniMed
shares. Mr. Tredgett also advised Mr. del Moral that Vantage
was aware of other significant CanniMed shareholders that may also
be prepared to support an offer for the outstanding CanniMed
shares. Mr. Tredgett provided Mr. del Moral with an internal
analysis prepared by Vantage to illustrate the potential benefits
of an acquisition of CanniMed.
On November 8, 2017, management of
Aurora met, via telephone conference, with management of Vantage
and of PFM Capital Inc. ("PFM"), which manages Saskworks and
Apex. At that meeting, Aurora learned that, consistent with
the disclosure of CanniMed in its Q3 2017 MD&A, CanniMed was
seeking to acquire a business in the adult usage cannabis market,
and Vantage and PFM did not agree with that strategy. At this
meeting, pricing was discussed in the context of a friendly
transaction. Aurora proposed a price of $19 per CanniMed share, to be paid in Aurora
shares. No exchange ratio was set.
Following the November 8, 2017
meeting, management of Aurora conducted an assessment of a
potential acquisition of CanniMed and determined that a take-over
of CanniMed by Aurora would be accretive. Over the course of
November 9 through to the 11th,
Aurora negotiated the material terms of the Lock-Up Agreements with
the Locked-Up Shareholders. As part of these
negotiations, Aurora exchanged financial models for the potential
acquisition of CanniMed with the Locked-Up Shareholders, reflective
of their different opinions of the potential value of the proposed
acquisition. After making adjustments for each Locked-Up
Shareholder, the Locked-Up Shareholders and Aurora agreed to enter
into "hard" lock-up agreements, subject to Aurora making a proposal
for CanniMed shares at $21 per share,
with the exchange ratio being set as of the close of business on
November 10, 2017. The parties
also agreed that each Lock-Up Agreement would include (i) a right
of the Locked-Up Shareholder to terminate its Lock-Up Agreement if
the consideration (based on the exchange ratio of 4.52586207 Aurora
shares per CanniMed share) (the "Offer Consideration")
decreased to less than $18 (subject
to the right of Aurora to increase the Offer Consideration to
$18), and (ii) the right of Aurora to
adjust the exchange ratio if the Offer Consideration exceeded
$24.
In the evening of November 10,
2017 after the Offer Consideration was determined, Aurora
engaged Canaccord Genuity Corp. ("Canaccord") to act as its
financial advisor in connection with the Aurora offer. At the
time of the engagement, Aurora was unaware that Canaccord had
previously been engaged by Newstrike. Late on November 11, 2017, Canaccord provided to Aurora
an information package in which it compiled publicly available
information on CanniMed. A copy of this information package,
after redaction of confidential information that would be seriously
detrimental to Aurora, has been filed under Aurora's profile
on SEDAR for all shareholders to review.
Aurora formulated its November 13,
2017 Proposal to present to CanniMed based on the terms of
the Lock-Up Agreements in a very tight time frame between November 9 and November 13, 2017.
It was not Aurora's preference to formulate a proposal for a
significant transaction in such a tight time frame. However,
Aurora was informed that the Locked-Up Shareholders were not in
favour of CanniMed's proposed acquisition strategy, and that the
Locked-Up Shareholders, and in particular Vantage, required that a
formal proposal be delivered to CanniMed no later November 13, 2017. In discussions held on
November 12, 2017 with the Locked-Up
Shareholders to finalize the Lock-Up Agreements, representatives
from the Locked-Up Shareholders made it clear that they were
concerned that the Board of CanniMed would be meeting on
November 13 to consider an
acquisition transaction with a recreational cannabis company.
Aurora was not aware of the company being considered, the nature or
size of the acquisition, or the stage of the acquisition. As
a result, the Lock-Up Agreements included a provision that if the
Proposal was not delivered by 12:30 p.m.
(EDT) on November 13, 2017,
each of the Lock-Up Agreements would terminate.
On November 13, 2017, after
execution of the formal Lock-Up Agreements, Aurora delivered the
Proposal to CanniMed.
During the course of the negotiations of the Lock-Up Agreements,
Aurora was aware that:
- Rob Duguid, who was a director
of CanniMed, was also a partner of PFM, an officer of Saskworks,
and an officer of the general partner of Apex. However,
Aurora had no contact with Mr. Duguid before the commencement of
its take-over bid.
- Westcap Mgt. Ltd. ("Westcap") manages the
investments of Golden. Doug
Banzet, a director of CanniMed, was also a director and
officer of Westcap and a director of Golden, and Donald Ching, a director of CanniMed, was also a
director of Golden. Aurora had no contact with Mr. Banzet
before the commencement of its take-over bid. Mr. Ching
provided an acknowledgment of receipt of Aurora's Proposal on
behalf of CanniMed's Board on November 14,
2017. However, other than that acknowledgment, Aurora had no
contact with Mr. Ching before the commencement of its take-over
bid.
Based on CanniMed's public disclosure, Aurora is aware that Mr.
Duguid has subsequently resigned from the CanniMed Board and
Mr. Ching may no longer be a director of Golden. Aurora does not
know when Mr. Ching may have ceased being a director of Golden.
2. Other information that was: (i) obtained directly or
indirectly by Aurora from any person who is, or was at the relevant
time, in a special relationship with CanniMed (by reference to the
definitions in subsection 76(5) of the Securities Act (Ontario) and clause 85(1)(a) of the
Securities Act (Saskatchewan)); and (ii) material to
Aurora in structuring, determining the timing of, delivering or
implementing the Aurora Offer.
Aurora, after making inquiries, is of the view that it did not
obtain any other information, directly or indirectly, from any
person in a special relationship with CanniMed that was material to
Aurora in structuring, determining the timing of, delivering or
implementing its take-over bid to acquire the shares of CanniMed.
In order to ensure that shareholders have the benefit of the
disclosure made by Aurora in the course of the hearings before the
Securities Regulators on December 20
and 21, 2017, Aurora has filed today the affidavit of Mr. Booth
which was sworn in connection with that hearing under its SEDAR
profile, subject to the redaction of certain information in the
exhibits determined to be confidential.
3. Other information within Aurora's knowledge that
would reasonably be expected to affect the decision of the security
holders of CanniMed to accept or reject the offer made by the
Aurora Offer.
Aurora is not aware of any information, within Aurora's
knowledge, that would reasonably be expected to affect the decision
of the security holders of CanniMed to accept or reject its offer,
other than as has been disclosed in its offer and take-over bid
circular that was filed by Aurora on SEDAR on November 24, 2017 and in the Notice of Change to
be filed concurrently with this amended and restated news
release.
Additional Details of the Proposal
Readers are cautioned that Aurora may determine not to proceed
with the Proposal if: (i) it identifies material adverse
information concerning the business, affairs, prospects or assets
of CanniMed not previously disclosed by CanniMed; (ii) CanniMed
implements or attempts to implement defensive tactics (such as the
adoption of a shareholder rights plan, the grant of an option (or
similar right) to purchase material assets, the issue of additional
shares of CanniMed, or the announcement of a significant
acquisition by CanniMed) in relation to the Proposal. There can be
no assurance that the Proposal will result in a friendly
combination of Aurora and CanniMed or would proceed on the terms
set out in this news release.
Should a takeover bid be commenced, full details of the offer
will be included in a formal offer and the take-over bid circular
to be filed with securities regulatory authorities and mailed to
CanniMed shareholders. The offer will be subject to certain
conditions, including, but not limited to, receipt of all necessary
regulatory clearances, absence of material adverse changes in
CanniMed and acceptance of the offer by CanniMed shareholders
owning not less than 66-2/3% of the CanniMed common shares on a
fully-diluted basis. Once the 66-2/3% acceptance level is met,
Aurora intends, but is not required to, take steps to acquire all
of the outstanding CanniMed common shares and other convertible
securities or rights to acquire CanniMed common shares.
This press release does not constitute an offer to buy or an
invitation to sell, or the solicitation of an offer to buy or
invitation to sell, any of the securities of Aurora or CanniMed.
Such an offer may only be made pursuant to an offer and take-over
bid circular filed with the securities regulatory authorities in
Canada.
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
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. Various assumptions were
used in drawing the conclusions or making the projections contained
in the forward-looking statements throughout this news release.
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 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.
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.
SOURCE Aurora Cannabis Inc.