Aurora Cannabis says it has entered into confidentiality agreements with multiple parties that are examining potential transactions involving the company, as its board formally rejects Curaleaf Holdings’ revised $5-per-share hostile takeover offer.
In an October 14 announcement, Aurora disclosed that its special committee of independent directors has been actively exploring alternatives to Curaleaf’s proposal, including possible transactions with third parties or remaining an independent company.
Aurora said its financial advisor has contacted several potential interested parties, resulting in confidentiality and standstill agreements with multiple groups that have been reviewing company information. The company has also held numerous discussions with those parties, although it has not identified them or disclosed whether any formal competing offers have been made.
The announcement comes after Curaleaf increased its takeover proposal by 25% earlier this month, offering Aurora shareholders an implied $5 per share consisting of $1 in cash and 0.4013 Curaleaf shares. Curaleaf also raised the maximum potential consideration under the offer from $5 to $6 per share.
Despite the increase, Aurora’s board unanimously concluded that the revised proposal continues to significantly undervalue the company. The decision followed a review by its special committee and an updated opinion from its financial advisor finding the consideration inadequate.
“Curaleaf’s revised offer still does not reflect the value of the company Aurora shareholders own today,” said Aurora Executive Chairman and CEO Miguel Martin.
Aurora argues that Curaleaf’s offer would allow the company to gain control of Aurora’s substantial cash reserves without adequately compensating shareholders. It also expressed concerns about the risks associated with receiving Curaleaf shares and questioned the financial benefits Curaleaf claims would result from combining the companies.
Curaleaf has argued that the revised offer represents an 86% premium to Aurora’s unaffected share price before the takeover effort became public. The company has also projected that a combination would create a global marijuana company operating across 17 countries, with more than $1.5 billion in annual revenue and at least $40 million in anticipated annual cost savings.
Aurora’s latest announcement introduces the possibility of competing transactions, although the company cautioned that its strategic review may not result in an agreement with another party.
Aurora is urging shareholders not to tender their shares while the review continues, arguing that accepting Curaleaf’s offer prematurely could interfere with the possibility of securing a more favorable alternative.
Curaleaf’s revised takeover offer remains open until December 4. Aurora said its board intends to provide shareholders with another recommendation after it has had an opportunity to evaluate the potential alternatives.
