Provides Comments on CanniMed's Poison Pill
Tactic
TSX:ACB
- Aurora's proposed offer currently valued at $24.00 per CanniMed share
- Represents a 56.9% premium to CanniMed's closing price prior to
Aurora's takeover proposal announcement
- Lock-up agreements already in place with CanniMed's 3 largest
shareholders for 38% of CanniMed shares
- CanniMed's intention to acquire Newstrike is highly conditional
and oppressive to CanniMed shareholders in light of Aurora's
proposed offer
VANCOUVER, Nov. 20, 2017 /CNW/ - Aurora Cannabis Inc. (the
"Company" or "Aurora") (TSX: ACB) announced today that, further to
its press release of November 14,
2017, it intends to make an 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").
The Offer will provide holders of CanniMed Shares with
4.52586207 Aurora Shares for each CanniMed Share, subject to a
maximum of $24.00 per CanniMed Share
(the "Cap Price"). If the market value for 4.52586207 Aurora Shares
is more than the Cap Price (based on the 20-day VWAP of Aurora
Shares on the earlier of the expiry date for the Offer and the date
on which the conditions to the Offer have been satisfied), then
Aurora will adjust the number of Aurora Shares offered as
consideration in the Offer, such that the consideration payable for
each CanniMed Share is equal to the Cap Price.
The Offer Price, which would currently be equivalent to the Cap
Price of $24.00 given Aurora's
closing share price of $5.51 on
November 17, 2017, represents 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.
Background to the Offer
On November 13, 2017, Aurora
presented the CanniMed board of directors (the "Board") with a
proposal (the "Proposal") to explore a mutually agreeable merger on
the terms set forth in the Offer, and requested a response prior to
5:00 pm Pacific Time on November 17, 2017 (the "Proposal Deadline").
Although CanniMed's Board failed to respond to the Proposal prior
to the Proposal Deadline, Aurora would still welcome a transaction
supported by CanniMed's Board, and looks forward to engaging with
CanniMed's Board to deliver significant value to CanniMed
shareholders. However, at this time, the rationale for the
combination is too strong to accept inaction, and thus the decision
has been made to proceed to take Aurora's Offer directly to
shareholders.
"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," said Terry
Booth, CEO of Aurora. "We believe that CanniMed shareholders
would benefit greatly from a combination, not only through the very
significant premium we are offering for their shares, but also by
participating in Aurora's continued growth, which is well above our
industry peers, and is based on superior business strategy and
exceptional, industry-leading execution. We already have the
support from a large percentage of CanniMed shareholders, and look
forward to bringing this process to a positive conclusion for the
benefit of our combined shareholders."
CanniMed's Highly Conditional Intention to Acquire Newstrike
Resources
CanniMed's announcement late on November
17, 2017 (the "CanniMed Press Release") of its highly
conditional intention to acquire Newstrike Resources Ltd.
("Newstrike Resources" and "Newstrike Resources Offer") is
extremely troubling in light of the bona fide acquisition proposal
that Aurora presented to CanniMed's Board on November 13, 2017. 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 Newstrike Resources Offer requires CanniMed shareholders to
approve the transaction. Given that 38% of CanniMed shareholders
have contractually agreed to support the Aurora Offer and to vote
against any proposed action by the CanniMed Board, the Newstrike
Resources Offer is a highly conditional proposition with
significant uncertainty.
In entering into the highly conditional agreement, CanniMed has
agreed to pay a $9.5 million
termination fee to Newstrike Resources should a superior proposal,
such as the Aurora Offer, emerge. The termination fee, if paid,
represents approximately $0.41 cash
per share loss to CanniMed shareholders.
The assertion in the CanniMed Press Release that the terms of
the Aurora offer "are unknown" is dubious, given that the detailed
terms available to CanniMed shareholders were outlined in the
proposal delivered by Aurora on November 13,
2017 to the CanniMed Board.
In light of these considerations, it is clear the Newstrike
Resources Offer should be considered oppressive to CanniMed
shareholders and to Aurora's Offer, which delivers significantly
higher financial and strategic value to CanniMed shareholders.
Aurora is reviewing its options with respect to CanniMed's
Newstrike Resources Offer and will comment further in due
course.
Compelling Strategic Rationale for the Aurora-CanniMed
Combination
Aurora believes that the combination of the two companies is
extremely compelling, in the best interest of all shareholders, and
will accelerate growth and shareholder value creation for the
combined entity, further extending the Company's leadership
position within the global cannabis sector.
Among other things, the combined entity will have:
- Over 40,000 patients - a combined total of over 40,000
active registered cannabis patients in Canada;
- 5 state-of-the-art facilities - significant cultivation
capacity with five state-of-the-art facilities;
- 130,000 kg funded capacity - funded capacity of over
130,000 kilograms of annual production, 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;
- Increased export capacity - multiple EU GMP-compliant
production facilities and significantly increased export
capacity;
- Increased oil production - high throughput oil
production through Aurora's strategic extraction partner Radient
Technologies Inc. to satisfy growing international demand;
- Broader product portfolio - expanded existing and
new, near-term product offerings, delivery mechanisms, and
devices;
- Strategic product synergies - complementary product
offerings which will enable faster market penetration in new
sectors for both companies;
- Improved yields - enhanced production yields and product
quality through cross-application of proprietary technologies and
intellectual property from each of Aurora and CanniMed;
- CanvasRx - immediate ability to address demand
growth constraints at CanniMed through CanvasRx's industry leading
physician education and patient counselling services;
- Accelerated growth through innovation - enabling
CanniMed to leverage Aurora's sector leadership in execution,
technology integration and innovation to accelerate development and
growth potential;
- Genetics - expansion of both companies' portfolio
of genetics;
- eCommerce - enabling CanniMed to leverage Aurora's
unparalleled e-commerce platform, including the only mobile app in
Canada that enables customer
purchases;
- Same day delivery - expanding Aurora's same-day delivery
service into additional areas across Canada; and
- Strong cash position and balance sheet fueling rapid
growth - Aurora`s sector-leading cash position and balance
sheet will enable faster roll-out of initiatives for CanniMed to
accelerate growth.
Reasons for CanniMed Shareholders to Support the
Aurora-CanniMed Combination
- Significant Premium to Market Price. The Offer, based on
Aurora's closing share price of $5.51
on November 17, 2017, will result in
CanniMed shareholders receiving the Cap Price of $24.00, which represents 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.
- 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. 38% of CanniMed
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. The Locked-Up Shareholders include CanniMed's
three largest shareholders.
- Continued Participation with an Industry Leader. Aurora
has rapidly become a globally dominant cannabis company with a
proven track record of exceptional shareholder value creation, with
its rapid expansion driven by its agility, innovation and
unparalleled execution. 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 a
market capitalization of approximately $3
billion, in addition to significantly enhanced liquidity
relative to CanniMed, providing greater access to capital. Aurora
has cash of more than $340 million
upon closing of its two current capital initiatives, relative to
only $54 million for CanniMed.
Aurora's capital position provides very significant firepower to
continue pursuing its aggressive global expansion and
differentiation strategy.
- 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
the agreements with the Locked-Up Shareholders, CanniMed will be
unable to proceed with an alternative competing transaction to the
Offer. If the Offer is not successful and no competing transaction
is made, Aurora believes it is likely the trading price of CanniMed
shares will decline to pre-Offer levels.
Proposed Offer Particulars
Provided Aurora does not uncover or otherwise identify
information suggesting that the business, affairs, prospects or
assets of CanniMed have been materially impaired, Aurora intends to
commence the bid during the week of November
20, 2017 and thereafter mail a takeover bid circular to the
registered holders of CanniMed Shares (in the time required under
applicable Canadian securities laws). Aurora expects that the
Offer, when made, will be remain open for acceptance for at least
105 calendar days from the date of the commencement of the
Offer.
Aurora anticipates that the Offer will be 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) receipt of all
governmental, regulatory and third party approvals that Aurora
considers necessary or desirable in connection with the Offer;
(iii) no material adverse change having occurred in the business,
affairs, prospects or assets of CanniMed; and (iv) the minimum
tender and other conditions set out in National Instrument 62-104
Take-Over Bids and Issuer Bids. In addition, Aurora may
require the approval of its shareholders to issue the Aurora Shares
to be distributed by it in connection with the Offer. If required,
Aurora expects that it may 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 if required by the policies
of the Toronto Stock Exchange.
Intention to Make an Offer
CanniMed shareholders should note that Aurora has not yet
commenced the Offer and should carefully review the cautionary
statements set out below in this News Release respecting the status
of the Offer and the factors that may cause Aurora not to make the
Offer.
Aurora may determine not to make the Offer 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 a shareholder rights plan, grant of an
option (or similar right) to purchase material assets, material
acquisitions, issuances of shares (including, a private placement),
or increased indebtedness (including, incurrence of significant new
liabilities) in relation to the Offer); (iii) CanniMed completes or
undertakes to complete any significant transactions, including the
proposed, but not yet completed, acquisition of Newstrike Resources
Ltd.; or (iv) CanniMed determines to engage with Aurora to
negotiate the terms of a combination transaction and Aurora and
CanniMed determine to undertake that transaction utilizing a
structure other than a takeover bid (a plan of arrangement, for
example). Accordingly, there can be no assurance that the Offer
will be made or that the final terms of the Offer will be as set
out in this News Release.
If Aurora proceeds with the Offer, full details of the Offer
will be included in the formal offer and take-over bid circular to
be filed with securities regulatory authorities and mailed to
shareholders.
This News 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.
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 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 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 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.
In particular, this
News Release contains forward-looking information
concerning:
|
(i)
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the Offer, various
terms of the Offer and the anticipated timing of commencement of
the Offer;
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(ii)
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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
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(iii)
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expectations with
respect to business and geographical diversification of the
combined entity.
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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
or privately negotiated purchases.
Cautionary Statement Respecting Status of the Offer
Aurora has not yet commenced the offer noted above in this news
release. Upon commencement of the offer, aurora will file a
takeover bid circular with various securities commissions in
Canada. The takeover bid circular
will contain important information about the offer and should be
read in its entirety by CanniMed shareholders and others to whom
the offer is addressed. After the offer is commenced, CanniMed
shareholders (and others) will be able to obtain, at no charge, a
copy of the offer to purchase, takeover bid circular and various
associated documents when they become available on the system for
electronic document analysis and retrieval (SEDAR) at
www.sedar.com. This announcement is for informational purposes only
and does not constitute or form part of any offer or invitation to
purchase, otherwise acquire, subscribe for, sell, otherwise dispose
of or issue, or any other solicitation of any offer to sell,
otherwise dispose of, issue, purchase, otherwise acquire or
subscribe for any security. The offer will not be made in, nor will
deposits of securities be accepted from a person in, any
jurisdiction in which the making or acceptance thereof would not be
in compliance with the laws of such jurisdiction. However, Aurora
may, in its sole discretion, take such action as it deems necessary
to extend the offer in any such jurisdiction.
SOURCE Aurora Cannabis Inc.