Faced with resistance from Aurora, Curaleaf raises its offer by 25%

TheCuraleaf's Hostile Takeover Bid for Aurora Cannabis is having trouble breaking through the barriers. After the Canadian producer’s board of directors unanimously rejected its first proposal, Curaleaf Holdings has decided to put more money on the table. The group announced on October 5 a a 25% increase in its supply, now valued at 5 U.S. dollars per Aurora share, while improving several of its terms.

A new offensive that demonstrates the Aurora Cannabis's resistance and the need for Curaleaf to make its offer more attractive to shareholders. Aurora, however, is not giving up: the company is still asking shareholders not to make any decisions until the revised offer has been formally filed and reviewed.

Curaleaf's offer raised by 25 %

Under the newly announced terms, the shareholders of’Aurora Cannabis would receive 0.4013 Curaleaf shares and $1 in cash for each Aurora share. The initial proposal called for 0.3463 Curaleaf shares and $0.75 in cash, worth approximately $4 at the time of the announcement in August.

Curaleaf now values its offering at $5 per share, representing a premium of 86 % over Aurora’s 30-day weighted average price, which stood at $2.75 as of August 10, the day before the company announced its intention to launch a bid.

The group also raised the maximum price for the transaction by 20%, from $5 to $6 per Aurora share.

Curaleaf says it has strengthened its offering after engaging with a significant portion of Aurora's shareholders. Its President and CEO Boris Jordan states that these investors support the strategic rationale for a merger.

A future international cannabis giant?

For Curaleaf, the stakes go far beyond the acquisition of a Canadian competitor. The group is presenting the merger as an opportunity to create an international cannabis platform with operations in 17 countries.

On a revenue basis, the new group would report more than $1.5 billion in revenue over a 12-month period, near $350 million in adjusted EBITDA and a market capitalization of more than 3 billion dollars. Curaleaf also expects at least $40 million in annual synergies.

In particular, the transaction would allow Aurora’s shareholders to maintain exposure to the Canadian group’s international operations while gaining access to Curaleaf’s U.S. portfolio.

The bidder also agreed to include in its documents the pro forma financial statements demanded by Aurora and extended the expiration date of its offer to December 4, 2026, at 11:59 p.m. Mountain Time.

Aurora Cannabis is still asking its shareholders to wait

These concessions are not yet enough to convince Aurora Cannabis. The Edmonton-based group emphasizes that the October 5 announcement does not, in and of itself, constitute a formally submitted revised bid.

«Today’s announcement by Curaleaf does not constitute a formal revised offer, and Aurora has not yet received the documents necessary to conduct a full and proper evaluation,» said Miguel Martin, Executive Chairman and CEO of Aurora.

The special committee, composed of independent directors, intends to review the final documents before the board issues a new recommendation. In the meantime, Aurora is therefore maintaining its stance: shareholders should not take any action regarding the hostile bid.

Aurora also believes that its efforts with the Alberta Securities Commission have already borne fruit. In particular, the group had challenged the lack of pro forma financial statements and the initial timeline for the offering—two issues that Curaleaf now plans to address.

The Battle for Aurora

The increase in the offer also addresses one of the main criticisms leveled at the initial proposal: its financial viability. Aurora had significant cash on hand, whereas the initial structure of the offer limited the upside potential for its shareholders while exposing them to fluctuations in Curaleaf’s stock price.

By putting more cash on the table and increasing the equity portion, Curaleaf is now trying to make its proposal harder to dismiss.

The next step, however, will be crucial: the formal submission of the revised offer and its review by the special committee of’Aurora Cannabis. Until an official recommendation is made, the battle remains undecided.