Curaleaf Holdings is accusing Aurora Cannabis’ board of directors of obstructing its proposed $5-per-share takeover while allowing other potential buyers access to confidential company information, escalating an increasingly contentious acquisition battle between two major marijuana companies.
In a statement issued October 19 and filed with the U.S. Securities and Exchange Commission, Curaleaf challenged Aurora’s decision to reject its improved acquisition proposal, arguing that the board is denying shareholders a fair opportunity to evaluate the transaction.
“The Board has locked out Curaleaf while granting diligence access to unnamed parties,” said Curaleaf Chairman and CEO Boris Jordan, who accused Aurora’s leadership of failing to act in shareholders’ best interests.
The accusations follow Aurora’s October 14 announcement that its board had unanimously rejected Curaleaf’s revised offer while entering confidentiality agreements with multiple other parties interested in potential transactions. Those parties have been allowed to examine Aurora’s financial and operational information, while Curaleaf says its repeated requests for similar access have been denied.
Curaleaf increased its original 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. The company says the proposal represents an 86% premium over Aurora’s unaffected share price before the takeover effort became public, or a 217% premium when adjusting for Aurora’s cash holdings.
In its latest filing, Curaleaf also questioned Aurora’s valuation arguments, pointing out that the company issued shares through its at-the-market equity program at prices as low as $2.60 in July. Curaleaf argued that Aurora’s willingness to sell shares at those prices conflicts with its position that the revised takeover proposal undervalues the business.
The company additionally raised concerns about the independence of Aurora’s financial adviser, Fort Capital, noting that some advisory fees could be contingent on an alternative transaction or no transaction being completed. Curaleaf questioned why Aurora’s special committee had not obtained a second independent fairness opinion.
Aurora has maintained that Curaleaf’s proposal significantly undervalues the company and exposes shareholders to risks associated with receiving Curaleaf stock. Its board has also questioned the financial benefits Curaleaf projects from combining the businesses and argued that shareholders could receive greater value through another transaction or by keeping Aurora independent.
Curaleaf disputes those conclusions and says Aurora cannot reasonably demand more detailed information about projected merger savings while simultaneously refusing to provide access to the confidential records needed to substantiate those estimates.
The revised takeover offer remains open until December 4, unless extended, accelerated or withdrawn. Aurora continues to recommend that shareholders reject the proposal and take no action while its board evaluates potential alternatives, while Curaleaf says it remains prepared to begin negotiations and due diligence immediately.
