Canadian marijuana producer Aurora Cannabis has agreed to acquire CanniMed Therapeutics in a sweetened $1bn (€815m) cash-and-stock deal that would be the largest yet in the country’s red-hot cannabis industry, writes Scott Deveau and Kristine Owram.
Investors will get 3.4 Aurora shares for each CanniMed share, or they can accept cash limited in aggregate to C$140m (91.6m), the companies said in a joint statement.
The deal values CanniMed at about C$50.29 a share, based on a closing price for Aurora of C$14.79. CanniMed closed at C$37.51.
In connection with the merger, CanniMed agreed to terminate a previously agreed takeover of Newstrike Resources and will pay the company a C$9.5m break fee.
“It has been quite a long road but it’s been well worth it,” Cam Battley, chief corporate officer at Aurora, said.
“We’re going to create something new and very special in this sector,” he said.
Share prices of Canadian growers have surged ahead of legalisation, which is expected later this year.
The country has at least 84 publicly traded companies tied to marijuana that trade on its exchanges, with a combined market valuation of €24bn.
In October, Constellation Brands, the seller of Corona beer, announced the purchase of a minority stake in Canadian weed producer Canopy Growth, marking the first major foray by an alcohol company into the industry.
CanniMed shares soared 20% to C$45, while Aurora fell 1.2% to C$14.97 at one stage in Toronto.
Newstrike shares plunged 18%.