Aurora board recommends rejecting Curaleaf's improved $5.00-a-share offer
Key Facts
Aurora Cannabis' board unanimously recommended that shareholders reject Curaleaf's improved takeover offer and not tender their shares, according to a notice of amendment to its directors' circular filed with the U.S. Securities and Exchange Commission. The recommendation followed Curaleaf's increase in the implied offer consideration by 25% to US$5.00 per Aurora share. Aurora said in its statement that its financial adviser had provided an updated opinion on the amended offer terms. The adviser concluded that the consideration was inadequate, from a financial point of view, for the company's shareholders. The offer remains open to shareholders despite the board's recommendation against accepting it.
According to Curaleaf's offer update filed with the SEC, the improved consideration consists of 0.4013 Curaleaf shares and US$1.00 in cash for each Aurora share. The company also raised the maximum consideration from US$5.00 to US$6.00 per share under the amended terms. In its objection to the consideration structure, Aurora warned that its shareholders would remain exposed to a decline in Curaleaf's share price, which forms part of the offer. It said this component included no "floor or price collar." Its warning thus focuses on the risks of the stock portion of the consideration shareholders would receive if they accepted the offer.
The original offer set the implied consideration at US$4.00 per Aurora share, according to Curaleaf's offer circular filed with the SEC. The company described that consideration as representing a 45% premium to Aurora's reference share price before the announcement of its takeover intentions. In its update to the offer terms, Curaleaf said the improved proposal offered an 86% premium to the reference price before the announcement. The original offer also stipulated that completion was not subject to a financing condition. Nor did it require the completion of due diligence, according to the terms in the circular launching the offer.
The dispute between the companies extended to engagement over the deal and access to information needed to assess it, according to Curaleaf's statements filed with the SEC. When announcing the improved offer, Boris Jordan, Curaleaf's chairman and chief executive, accused Aurora of refusing to engage with his company. Jordan said: "We are strengthening our proposal despite Aurora's refusal to engage and provide customary due diligence." Curaleaf said the improved proposal was prepared solely on the basis of publicly available information about the target company. In an earlier statement responding to Aurora's circular, Jordan also said: "No counteroffer has ever been presented to us."
Curaleaf's case for the benefits of a merger rests on the breadth of operations, revenue scale and opportunities to reduce costs, according to its notice of amendment to the offer. It said the combined entity would operate in 17 countries and that the companies' combined revenue over the last twelve months exceeded US$1.5 billion. It estimated expected annual merger cost savings of at least US$40 million, linking those savings to completion of the proposed deal. Presenting Aurora's position, its chief executive Miguel Martin said the company was debt-free. He added, in a company statement, that it had a strong cash position.
As part of its search for alternatives, Aurora confirmed in the notice of amendment to its directors' circular that it had entered into confidentiality and standstill agreements with multiple parties. The options under consideration include a potential transaction with one or more other parties, according to the notice filed with the SEC. The company also lists remaining independent among its alternatives, alongside pursuing a deal with other parties. But it cautioned about the outcome of that process, saying: "There can be no assurance that the process will result in a transaction." Aurora told shareholders in a statement that they had until at least December 4, 2026 to consider their options.