Curaleaf reports competition clearances for Aurora Cannabis bid
Canada and Germany have completed competition reviews, Curaleaf says, while its offer remains outstanding until Dec. 4.
Adrian Kessler
Canada's Competition Bureau issued a no-action letter on Nov. 2, and Germany's Federal Cartel Office cleared a proposed cannabis takeover on Nov. 3, according to the bidder's Nov. 10 announcement. Curaleaf Holdings, Inc. TSECURA OTCMKTSCURLF said the decisions complete competition reviews for its offer for Aurora Cannabis Inc. TSEACB NASDAQACB, which expires Dec. 4.
The bureau's letter said its interim commissioner did not, at that time, intend to apply under section 92 of the Competition Act, according to Curaleaf. The letter concerned the proposed purchase of up to all Aurora's issued and outstanding common shares. Curaleaf says Canada and Germany were the only jurisdictions requiring competition clearance, but remaining offer conditions must still be satisfied or waived.
Curaleaf is a large U.S.-based cannabis producer and retailer serving medical and adult-use markets through domestic operations and an international supply chain.
Before the announcement, Curaleaf TSECURA closed at C$12.68 in Toronto at 4 p.m. EST on Nov. 9. Aurora TSEACB closed at C$7.30 in Toronto at 4 p.m. EST on Nov. 9.
Germany's Federal Ministry for Economic Affairs and Energy approved the proposed purchase of all voting rights in Aurora Europe GmbH, Aurora Deutschland GmbH and Aurora Produktions GmbH on Oct. 20, Curaleaf said. The Federal Cartel Office's Nov. 3 confirmation said the acquisition could be implemented under German competition law. The regulator letters themselves were not reviewed for this article.
"With all required competition law clearances secured, the path is clear for Aurora shareholders to realize the value our Offer provides," Curaleaf chair and chief executive Boris Jordan said in the release.
Organigram Has Aurora's Board Support
A competing Nov. 3 agreement pairs Organigram Global Inc. TSEOGI NASDAQOGI with Aurora at C$7.80 per share. It values the target at approximately C$561 million on a fully diluted equity basis. Aurora's board unanimously supports that transaction and rejected Curaleaf's revised bid, according to the companies' joint release.
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Curaleaf's Oct. 6 terms offer US$1 in cash plus 0.4013 Curaleaf shares for each Aurora share. The cash-and-stock offer has a US$6 cap per Aurora share, according to that release. Its share component exposes the consideration's value to changes in Curaleaf's stock price.
Organigram's Nov. 3 terms allow an all-share election of 5.8626 Organigram shares for each Aurora share. The mixed election is C$3.75 plus 3.0431 Organigram shares, with elections subject to proration. Aurora holders are expected to own about 35 per cent of the combined company on a fully diluted economic basis and 42 per cent of its voting ownership.
Bidders Cite International Scale
Curaleaf's offer website, accessed Nov. 10, projects at least US$40 million in potential savings across overhead, procurement and supply chains. Its presentation emphasizes continued share ownership and diversification across international cannabis operations.
Organigram and Aurora's Nov. 3 announcement highlighted a combined network of five production and distribution facilities certified to European good manufacturing practice standards. They identified more than C$50 million in synergies from procurement, distribution, public company expenses and cross-selling. Those projections accompany a proposed combination of Organigram's Canadian recreational operations and Aurora's international medical cannabis business.
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Curaleaf's offer is scheduled to expire at 11:59 p.m. MST on Dec. 4, according to its shareholder website. That is the deadline for Aurora shareholders to tender under the current timetable, unless Curaleaf withdraws or amends the offer.
