Canadian licensed cannabis producer Aurora has reached an agreement with the board of directors at CanniMed Therapeutics to acquire the company in full after two months of intense negotiations.
CanniMed shareholders could receive 3.40 Aurora shares for each CanniMed share or a combination of shares and cash, to a maximum aggregate of $140 million. It’s the cannabis industry’s largest deal yet, valued at approximately $1.1 billion.
“A testament to the great team at CanniMed, this transaction clearly confirms that the company has been highly successful in becoming a preeminent global leader in the medical cannabis industry," said Brent Zettl, CanniMed's president and CEO, said in a statement.
In November, Edmonton-based Aurora launched a hostile takeover bid at $24 per share. According to a press release issued by Aurora, the new deal is a 79 per cent increase from the previous offer. Aurora announced their intentions as Saskatoon’s CanniMed announced its own plans to acquire Newstrike, the Tragically Hip-backed weed grower in Ontario. That deal is now not proceeding, but CanniMed will pay the company a $9.5 million break fee.
CanniMed was the first company to be licensed to produce cannabis under the old Marihuana for Medical Purposes Regulations (MMPR), but Aurora’s chief corporate officer Cam Battley says it was their purpose-built facility that aligned so well with the company’s plans to dominate both the domestic and European medical cannabis markets.
“If you take a look at all of our facilities, including our hybrid greenhouses, they are not like traditional greenhouses in that they’re a closed system with overpressure, meaning we have precision control over all of the critical environmental variables, from the lighting to the temperature to the humidity and the nutrients,” Battley said by phone. “And that gives us extremely good consistency of production and it also makes it easy for us to build and produce to GMP standards, Good Manufacturing Practices.”
Since receiving its license to produce cannabis in 2015, Aurora has rapidly expanded its production capacity. They operate Aurora Mountain, a 55,200 square-foot hybrid greenhouse in Mountain View County, Alta. and Aurora Vie, a 40,000 square-foot facility located in Pointe-Claire, Que. Aurora Sky will be an 800,000 square-foot hybrid greenhouse in Alberta's Leduc County, near the Edmonton International Airport and the company also acquired Lachute, Quebec’s H2 Biopharma in November, giving them another 48,000 square feet of nearly completed purpose-built space near the Montreal International Airport, with more land to spare. Earlier this month, they secured a 17.62 per cent interest in The Green Organic Dutchman in Valley Field, Quebec. with access to a minimum of 20 per cent of what is produced.
Rendering of the planned 800,000 square-foot Aurora Sky production facility, courtesy of Aurora
But even with recreational legalization in Canada on the horizon and a fast-growing medical consumer base, Aurora has also set its sights on Europe’s evolving medical cannabis market. They have a 51 per cent interest in Aurora Nordic, a whopping million square-foot production facility in Denmark, bringing the total planned production capacity of approximately 200,000 kg of dried flower per year. The company acquired Germany’s Pedanios, a leading pharmaceutical distributor to Europe, and they also won the first tender to supply Italy’s emerging medical cannabis market. Aurora Mountain already has EU GMP certification, and Battley is confident CanniMed’s production facility can be elevated to that level, too.
“[CanniMed] gives us the flexibility to supply both the Canadian domestic market and the very rapidly growing and emerging European cannabis markets,” Battley said.
In addition to its production facility, CanniMed already offers cannabis oil capsules – a hot item for patients registered with the ACMPR and beyond. In October, they announced a partnership with Avaria Health & Beauty Corp. to begin development of cannabis topicals, which are not yet legal under the ACMPR.
“CanniMed is a highly respected medical brand in Canada and we believe that it can be a highly respected medical brand elsewhere in the world as well,” Battley said. “And Aurora is in a very good position currently in that we have a brand that resonates both in the medical community, in part because we do a lot of work with physicians and a lot of continuing education programs. But Aurora also resonates in the cannabis community. That’s kind of a sweet spot for a cannabis company.”