Recreational cannabis firm Organigram has swooped to acquire Aurora Cannabis in a deal that has all-but ended Curaleaf hopes of landing its hostile takeover target.
The two Canadian firm have reached agreement on a cash and stock transaction that values Aurora at C$561 (A$572m).
The Aurora board, which has spent almost three months fighting off Curaleaf advances, accepted an offer of C$7.80 per share, a 32.4% premium to the stock’s closing price on Monday.
It represents a 93% premium to Aurora’s unaffected share price on August 10, the last full trading day before Curaleaf’s first bid.
The deal will comes as a bitter disappointment for Curaleaf which initially offered US$4 per Aurora share, later raising it to US$5. Aurora rejected both offers, insisting they were opportunistic and undervalued the business.
Aurora, the parent of MedReleaf Australia, disclosed in late October that it was exploring alternative deals.
Under the terms of the transaction, which is expected to complete in January, Aurora shareholders will have the option to receive cash, Organigram shares, or a combination of both.
Aurora shareholders are expected to hold approximately 35% of the combined group on a fully diluted basis and 42% voting ownership “ensuring a meaningful opportunity to participate in the combined company’s future growth and value creation”, Organigram said.
Aurora executive chairman Miguel Martin said in a statement: “Combining with Organigram will accelerate Aurora’s international growth strategy by strengthening commercial execution, expanding our product and R&D capabilities, and extending our global operating network.
“For Aurora’s shareholders, the transaction is the result of a robust strategic review process and delivers compelling value today, meaningful choice in how they receive it and the opportunity to participate in the future of a leading cannabis company.”
Organigram chief executive James Yamanaka described the transaction as a “defining step in Organigram’s strategy to build a disciplined, global cannabis leader”.
“By bringing together Aurora’s established global medical cannabis platform with our Canadian operations and growing international footprint, we are creating a larger, stronger, and more diversified company,” he said.
“We are excited to build on our complementary operations, expertise, capital resources, and cultures to accelerate growth, meet the growing global demand, and drive long-term profitable growth.”
The firms said the agreement will create a “global cannabis leader” with operations in Canada, Germany, Poland, Australia and New Zealand.
The combined company will own and operate five EU-GMP certified production and distribution facilities and “bring world-class innovation to existing and new markets to meet international demand and support global market share expansion”, the statement added.
“Together, Organigram and Aurora will create a global cannabis champion with a leadership position in Canada, Europe and Australia and a growing presence across other key regions.
“The companies will boast a global platform with greater scale, broader capabilities, financial strength and international reach.
“Organigram’s recreational cannabis leadership, production network, R&D platform and European medical commercial operations complement Aurora’s global medical cannabis leadership, established international presence, and EU-GMP certified manufacturing capabilities.”
Organigram noted the deal has the backing of its cornerstone strategic shareholder, BT DE Investments Inc., a wholly owned indirect subsidiary of British American Tobacco.