The fight to acquire Aurora Cannabis may include a global tobacco giant.
In a signal that Curaleaf Holdings’ hostile takeover bid could be undercut, Organigram Holdings, a Canadian licensed producer partly owned by British American Tobacco, is also interested in acquiring Aurora, cannabis newsletter Cultivated reported.
Curaleaf first announced plans for a takeover bid of Aurora in August with a shareholder offer worth roughly $272 million.
The Connecticut-based company said Aurora’s board refused to engage on proposals sent in June and July. Aurora disputes that claim.
After Aurora’s board rejected that offer outright, Curaleaf came back Oct. 5 with an enhanced offer worth 25% more.
Meanwhile, publicly traded Organigram has also held talks with Aurora in recent weeks about a potential deal, according to Cultivated.
What cannabis companies are interested in taking over Aurora?
An Organigram-Aurora deal would give BAT indirect exposure to one of the largest medical cannabis businesses in Canada, Europe and Australia.
Both Aurora and Organigram declined comment to Cultivated, which reported that no deal is guaranteed.
But the talks could lead to an outright merger or another type of transaction.
And a competing bid could force Curaleaf to raise its price again or walk away.
In a statement Friday, Curaleaf said it is “outraged” and “appalled by Aurora’s actions.”
“The world’s largest cannabis company (market cap: $2.6 billion) is being denied customary due diligence access while a small Canadian Company (market cap: approximately $200 million) appears to be welcomed into the process,” the statement read in part.
“We are outraged, and Aurora shareholders should be too.”
“If value is truly the objective, shareholders should demand that Curaleaf be invited into Aurora’s process,” the statement added.
“Ultimately, what would Aurora shareholders rather own: the currency of a company with limited access to the Canadian market and a small international presence, or that of the largest global cannabis company with leading positions in both the US and internationally?”
Why does Curaleaf want to acquire Aurora Cannabis?
Whatever company takes over Aurora would add more than 50 tons of annual EU-GMP cultivation and manufacturing capacity to their portfolio, as Curaleaf pointed out in August.
With European markets like Germany rapidly growing, and with Canada-grown cannabis flower possibly unwelcome in the EU, a position like Aurora’s is enviable for any global cannabis firm.
If Curaleaf took over Aurora, the combined company would operate in 17 countries, with more than $1.5 billion in trailing 12-month revenue and nearly $350 million in adjusted earnings, Curaleaf has said.
How did the bid get here?
Curaleaf’s initial offer valued Aurora at $4 per share in Curaleaf stock and cash.
Aurora shares traded at $2.76 before the offer. Shares were trading around $4.30 on Tuesday.
On Oct. 5, Curaleaf raised its offer to $5 per share. It also extended the offer’s expiration to Dec. 4.
Aurora’s board has told shareholders to take no action while a special committee reviews the revised bid.
“If Aurora is providing diligence access to other parties, shareholders deserve a fair and open process that includes Curaleaf,” Curaleaf Chairman and CEO Boris Jordan said at the time.
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Do tobacco companies want to own cannabis firms?
BAT took a 19.9% equity stake in Organigram in 2021 through a 221 million Canadian dollars ($155.5 million) investment.
In 2023, it agreed to invest another 124.6 million Canadian dollars.
Much of that money funds Jupiter, Organigram’s pool for international expansion and strategic investments.
