Aurora Cannabis Inc. proposed the largest takeover bid in Canada’s nascent marijuana market in an attempt to expand its reach into Europe.
Aurora said late Tuesday it offered to acquire CanniMed Therapeutics Inc. in an all-stock, $582 million deal that values the Saskatoon, Saskatchewan-based company at $24 a share, 57 per cent above its closing price on Tuesday.
Both sides have yet to have “active discussions” about a deal, Aurora said in a statement. It added that investors holding 38 per cent of CanniMed stock are backing the takeover, and that the company has until 5 p.m. Vancouver time on Nov. 17 to respond to its proposal before Aurora proceeds with a formal bid.
CanniMed Therapeutics urged shareholders Wednesday to wait until the company has time to review the unsolicited takeover offer before doing anything.
The company says that it has not received a formal written offer from Aurora, but that it would review the terms set out in the press release and respond by the Friday deadline.
The bid comes as the frenzy surrounding Canada’s marijuana market reaches new highs ahead of legalization in July. Shares of Aurora have more than doubled this month, giving the medical marijuana company a market capitalization of about $2.5 billion, while its revenues in the year through June were just $18.1 million. The rally has been helped by speculation it can secure a strong market position in Quebec’s cannabis market.
In October, Constellation Brands Inc., the seller of Corona beer, announced the purchase of a minority stake in Canadian weed producer Canopy Growth Corp., marking the first major foray by an alcohol company into the industry and hinting at how Canopy may expand beyond the medical market and into recreational use.
Last year, Canopy acquired rival grower Mettrum Health Corp. for $344 million in the industry’s largest deal.
Aurora’s offer “could spark a wave of consolidation with the larger players ‘gobbling up’ the smaller ones,” Vahan Ajamian, an analyst at Beacon Securities Ltd. in Toronto, said in a note.
CanniMed is a medically focused producer. A tie-up would help both companies expand more aggressively into Europe, Aurora Executive Vice President Cam Battley said Tuesday in an interview.
“We’re making a very big push into Europe right now,” he said. “It’ll be a potential game-changer in the Canadian market and also internationally.”
Aurora dropped 2 per cent to $6.28 at 9:56 a.m. in Toronto while CanniMed’s stock was halted.
CanniMed declined to comment on the proposed takeover.