Aurora, a cornerstone investor in Cann Group and its largest shareholder, has walked away from its Australian partner after selling its near-12% stake.
The Canadian giant offloaded its 31.9 million shares to a “small number of undisclosed buyers”.
The price was also not disclosed. Based on the share price at close of business on Friday Aurora’s interest was worth £13.4m.
Cann’s shares fell 9% yesterday to close on $0.38.
The sale ends Aurora’s interest in Cann Group which began in early 2017 when it paid $6.4m for a 19.9% stake.
It later increased its investment to 22.9%, while in mid-2018 discussions took place over a potential takeover which ultimately failed to materialise.
More recently, however, Aurora has been beset with troubles in its home market. Aurora’s stake diluted during the year after telling Cann it would no longer particulate in any fund raising. Nevertheless, Aurora claimed to view its relationship with Cann, including its offtake agreement, as “strategically important”.
Cann currently has a five-year offtake agreement with Aurora that enables Cann to sell cannabis products to its former partner until 2024.
Aurora said its exit from Cann “is consistent with Aurora’s current strategic priorities”.
In a statement, Cann said the decision will have no impact on its business plan.
“[Cann] remains focused on developing a growing and diversified supply base with B2B customers in Australia and overseas and proceeding with plans to expand its manufacturing capacity,” the company said.
While in regular contact with Aurora, Cann chief executive Peter Crock said in late August that its Canadian partner was preoccupied with “getting its house in order”.
This inward-looking focus was unlikely to change any time soon, he said.
“The oversupply of recreational cannabis continues to impact the North America market and will take some time to work through and put demand supply dynamics back into balance,” Crock said.