Curaleaf challenges Aurora's rejection of revised takeover offer
The bid offers US$1 in cash plus 0.4013 Curaleaf shares for each Aurora share, with a Dec. 4 tender deadline.
Adrian Kessler
Access to Aurora's confidential information remains disputed as Curaleaf Holdings, Inc. TSECURA OTCMKTSCURLF challenged the board's rejection of its enhanced takeover offer on Monday. The bid remains open until Dec. 4 while Aurora explores alternatives.
Under Curaleaf's Oct. 6 filing announcement, Aurora Cannabis Inc. TSEACB NASDAQACB holders would receive 0.4013 Curaleaf subordinate voting shares plus US$1 per share. Aurora's board unanimously recommended rejection on Oct. 14, following a special committee recommendation and an updated financial adviser's inadequacy opinion.
Curaleaf is a large international cannabis producer and retailer based in Stamford, Conn., serving medical and adult-use markets.
Curaleaf's OTCMKTSCURLF shares closed at US$7.83 at 4:00 p.m. EDT on Oct. 16, before Monday's statement. Aurora's TSEACB shares closed in Toronto at C$5.64 at 4:00 p.m. EDT on Oct. 16.
"The Board has locked out Curaleaf while granting diligence access to unnamed parties and cites selective sources to support its agenda," Curaleaf chairman and chief executive Boris Jordan said in Monday's release.
Offer Value Depends On Curaleaf Shares
Curaleaf advertised an implied US$5 offer value in its Oct. 6 announcement, using its share price on Oct. 2. The revised bid raised the maximum consideration to US$6 per Aurora share, capping the value available if Curaleaf's stock rises.
The buyer argues that Aurora's cash should be valued dollar for dollar when assessing the premium. Aurora argues that a significant portion of the cash consideration would effectively be funded through its own balance sheet, and says holders would remain exposed to declines in Curaleaf shares.
Monday's response also challenges Aurora's treatment of competing parties. Curaleaf says it has repeatedly sought access to confidential information while the target has provided access to others. It says its Oct. 6 update voluntarily addressed Aurora's disclosure objections, including the disputed need for pro forma financial statements.
Aurora's Oct. 14 statement confirms confidentiality and standstill agreements with multiple parties examining its information. Its special committee is considering third-party transactions and remaining independent, and the company cautions that the process may produce no transaction.
Aurora says holders who have already tendered and wish to withdraw should contact their broker or its information agent. The board intends to provide another recommendation after evaluating alternatives, but its statement gives no date for that recommendation.
Cannabis Buyers Pursue International Assets
Aurora describes medical cannabis markets across Canada, Europe, Australia and New Zealand, with manufacturing facilities in Canada and Germany. Curaleaf markets the proposed combination as broader global diversification, alongside the retail business it already operates.
Read more: Curaleaf relocates Gettysburg dispensary to York, keeping 18 Pennsylvania stores
On its offer website, accessed Oct. 19, Curaleaf promotes at least US$40 million in potential synergies across overhead, procurement and supply chains. Aurora says Curaleaf has not adequately supported its estimates and argues that existing Curaleaf holders would receive substantially all the benefits.
International assets are also drawing investment from Cronos Group Inc. TSECRON NASDAQCRON, which completed its CanAdelaar acquisition on Oct. 15. The base price was €57.5 million, subject to adjustments and additional cash earnouts, for a business supplying the Netherlands' regulated adult-use pilot.
Read more: Cronos Group closes €57.5M CanAdelaar acquisition in the Netherlands
Curaleaf's current deposit deadline is Dec. 4, when Aurora holders face the choice of tendering into its bid or retaining their shares.
