Curaleaf Takes Hostile $4-Plus-$0.75-a-Share Bid for Aurora Cannabis to Shareholders

Curaleaf Holdings says it is going public with a takeover offer for Edmonton-based Aurora Cannabis after private talks stalled, a claim Aurora disputes.

FILE — dealmaking · Perzon SEO / CC BY 2.0

Curaleaf Holdings Inc. said it will bring an unsolicited offer to acquire Aurora Cannabis Inc. directly to Aurora's shareholders, after what it described as failed attempts to negotiate privately with the Edmonton-based company's leadership, according to CBC News.

Aurora confirmed Tuesday that it is forming a special committee of independent directors to evaluate the proposal, CBC reported, but stopped short of endorsing the bid and cautioned that a deal is not guaranteed.

Competing Accounts Of The Talks

Curaleaf, based in Stamford, Conn. and listed on the Toronto Stock Exchange, said its chief executive Boris Jordan sent Aurora a formal letter of intent on June 23 followed by a second letter on July 7, and that Aurora's board was "unwilling to engage in constructive discussions," per CBC's report.

"We were very disappointed that the board refused to meaningfully engage. We will now take our proposal directly to Aurora shareholders because the premium is significant, the strategic rationale is compelling, and further delay is unjustified," Jordan said, according to CBC.

Aurora disputed that characterization, telling CBC it received both letters but that only the July 7 note included financial terms, and that those terms did not spell out the proposed mix of cash and share consideration. Aurora also said its lead independent director had corresponded with Jordan as recently as July 24 and had not discouraged ongoing dialogue.

Terms Of The Offer

Under the proposal reported by CBC, Curaleaf has proposed paying Aurora shareholders $4 US per share, plus $0.75 US cash for each Aurora share — terms the source material presents as the combined consideration package rather than two separate offers. Curaleaf said the combined company would create a footprint in 17 countries across Europe, North America and other international markets, with more than $1.5 billion US in combined trailing 12-month revenue and at least $40 million US in projected annual cost synergies.

Jordan framed the deal as pairing Curaleaf's distribution network with Aurora's international medical cannabis franchise and production capacity. "We are offering Aurora shareholders a unique opportunity to participate in a more highly diversified global platform and increase their exposure to U.S. regulatory tailwinds," he said, according to CBC.

Analysts Push Back On Valuation

TD Cowen analysts Derek Lessard and Ryan Neal said in a note cited by CBC that the offer "undervalues the long-term potential of Aurora's business," pointing to Aurora's position in medical cannabis, its product portfolio, balance sheet and international regulatory track record as reasons the company could be worth more over time.

Sector Context

The bid lands amid a wave of cross-border and international consolidation among Canadian licensed producers, according to related coverage tracked in our database: Organigram recently reported record revenue following a European acquisition, per MJBizDaily, while Canopy Growth and SNDL have each secured EU-GMP certifications at Canadian facilities this month, according to BNN Bloomberg and Cannabis Business Times, respectively — credentials generally tied to export-market medical cannabis sales.

Aurora's international medical cannabis business, which Curaleaf and TD Cowen both cited as a key asset, operates against a backdrop of mixed trade signals abroad; StratCann reported this month that Israel has reopened an anti-dumping investigation into Canadian medical cannabis exports, a potential headwind for producers reliant on that channel.

Domestically, provincial retail data has shown some softness — CBC reported that Cannabis N.B. is facing a sales decline amid intensified illicit-market competition — though it is not established whether that trend applies to Aurora's own domestic sales specifically.

What To Watch

Aurora's special committee has not set a timeline for its review, and Aurora has said it will continue operating normally in the meantime, per CBC. Whether Curaleaf sweetens its combined $4-plus-$0.75-US-per-share proposal, whether Aurora's board recommends against the offer, or whether shareholders push the two sides back to the table remains unresolved, and the analysts' valuation critique suggests the current price may face resistance even if shareholders are given a direct vote.