Global marijuana operator Curaleaf Holdings has raised its hostile takeover offer for Canada-based Aurora Cannabis by 25% to $5 per share, according to a company news release.
The move follows the Aurora board’s unanimous rejection of the $272 million initial bid.
The enhanced offer, announced Oct. 5, would give Aurora shareholders 0.4013 Curaleaf subordinate voting shares plus $1 in cash for each Aurora share, the news release states.
The original offer consisted of 0.3463 Curaleaf shares and $0.75 in cash. The initial offer was valued at about $4 when Curaleaf announced it in August.
What did Curaleaf change in its offer?
Curaleaf said the new offer is an 86% premium to Aurora’s unaffected share price.
The figure is Aurora’s 30-day volume-weighted average price of $2.75 as of Aug. 10, the day before Curaleaf announced its plan to bid.
The company also raised the cap price, the maximum consideration per Aurora share, by 20% to $6, according to the news release.
The company will include the pro forma financial statements Aurora requested. It also extended the offer’s expiration to Dec. 4.
“Over the past several weeks, we have met with a significant percentage of Aurora’s shareholder base, all of whom are supportive of the strategic rationale for the deal,” Curaleaf Chairman and CEO Boris Jordan said in a statement.
Curaleaf said a combined company, which would operate in 17 countries, would have:
- More than $1.5 billion in trailing 12-month revenue
- Nearly $350 million in adjusted EBITDA
- At least $40 million in expected annual cost synergies
- Pro forma market capitalization topping $3 billion
Did shareholders come up short under Curaleaf’s previous offer?
Curaleaf’s initial bid was tilted in its favor, Darren Gleeman, managing partner of MBO Ventures, wrote in a Sept. 11 MJBizDaily column.
Aurora held more cash and short-term investments than the roughly $51 million in cash Curaleaf proposed to pay, he noted.
The $5 ceiling capped shareholders’ upside while leaving them exposed to any drop in Curaleaf’s stock, he added.
“If Curaleaf wants Aurora, it may. have to write a larger check, give Aurora shareholders more of the upside – or both,” Gleeman wrote.
