Aurora Cannabis is formally urging shareholders to reject Curaleaf Holdings’ unsolicited takeover bid, arguing that the offer significantly undervalues the company and would expose Aurora investors to additional financial and governance risks.

Aurora announced September 2 that its board of directors unanimously recommends shareholders take no action and not tender their shares to Curaleaf’s offer. Shareholders who have already tendered shares are being encouraged to withdraw them.

The recommendation followed a review by Aurora’s board and a special committee of independent directors, with the company saying both concluded the bid is not in the best interests of Aurora or its shareholders.

“This transaction would be harmful to Aurora shareholders as the hostile bid is inadequate,” said Aurora Executive Chairman and CEO Miguel Martin.

Aurora highlighted the companies’ contrasting balance sheets, saying it is debt-free and held approximately $149 million in cash, restricted cash, short-term investments and cash equivalents as of June 30. Aurora said Curaleaf had more than $1 billion in debt and other financial obligations as of the same date.

The company argues that under the proposed transaction, Curaleaf would gain control of much of Aurora’s cash while Aurora shareholders would receive only a portion of its value through the acquisition.

Aurora also raised concerns about the voting power shareholders would receive in a combined company. According to Aurora, its shareholders would own approximately 7.7% of the combined company based on the proposed exchange ratio but would control only about 3.2% of its voting power because of Curaleaf’s multi-voting share structure.

The board said remaining independent offers shareholders greater potential value as Aurora continues expanding its international medical marijuana operations.

Aurora said its recent strategy has focused on higher-margin medical marijuana markets, including Europe, Australia and New Zealand, while expanding its EU-GMP cultivation and manufacturing operations. The company said it has recorded growing international revenue and believes additional value remains to be realized from that strategy.

Aurora said its board and management are also evaluating other opportunities that could increase shareholder value, including potential alternatives to Curaleaf’s hostile bid.