CanniMed Therapeutics Inc. fired back at Aurora Cannabis Inc. – which formally launched its hostile takeover bid on Friday – saying the Vancouver-headquartered marijuana producer's management "has not demonstrated an ability to execute competently" and its all-stock offer is based on an "inflated Aurora share price."
Aurora formally tabled its hostile takeover bid for CanniMed on Friday, valued at $24 a share, with the condition that the medical-marijuana producer cancel its own planned acquisition of the Tragically Hip-backed marijuana company Newstrike Resources Ltd.
In response, CanniMed chief executive Brent Zettl said there is "serious concern" that Aurora's share price will drop, but its combination with Newstrike is "extremely well positioned to deliver significant shareholder value going forward."
"The only certainty for CanniMed shareholders is in the attractive and accretive Newstrike acquisition before them," Mr. Zettl said in a statement. "We can understand why a deal with CanniMed makes sense for Aurora but it makes no sense for our shareholders."
Aurora said in a statement on Friday that it placed a newspaper ad for its offer to acquire all issued and outstanding shares for up to $24, and a takeover-bid circular will be mailed to CanniMed's shareholders.
"We believe that we will be able to accelerate CanniMed's growth more effectively than current management, and so we invite and encourage CanniMed's shareholders to tender their shares to the bid," Aurora CEO Terry Booth said in a news release.
Aurora also outlined the conditions of its offer, including that CanniMed's recently proposed acquisition of Newstrike not proceed and be terminated.
Aurora says its offer will remain on the table until March 9, 2018. The acquisition would see Aurora serve 40,000 active registered patients, compared with 63,000 at Canada's largest marijuana company, Canopy Growth Corp.
This comes after Aurora first announced on Nov. 14 it submitted its takeover proposal to CanniMed's board, and that it had agreements with shareholders representing 38 per cent of CanniMed's outstanding shares to support its bid. It gave CanniMed until Nov. 17 to respond to its bid, which offers shareholders a 57-per-cent premium.
On Nov. 15, CanniMed acknowledged Aurora's announcement but said it did not receive a formal offer. CanniMed also added it was in advanced discussions to acquire Newstrike. On Nov. 17, CanniMed announced it had reached a definitive agreement to acquire Newstrike.
By Nov. 20, Aurora said it did not get a response from CanniMed and planned to go hostile with its offer.
CanniMed said on Friday the special committee it recently formed, in anticipation of a formal offer from Aurora, is reviewing the bid.
Shares of Aurora Cannabis were up roughly 6.5 per cent in early afternoon trading to $7.18 on the Toronto Stock Exchange. That's up roughly 136 per cent since the beginning of the month.
Meanwhile, CanniMed shares were down less than 1 per cent to $20.80 and Newstrike's stock slipped nearly 4 per cent to $0.51 on Friday late-morning trading.
CanniMed chief financial officer John Knowles said in a statement on Friday that the company is concerned that Aurora "has enjoyed a recent and significant run up in value that does not appear to be based on any substantive decisions or value created by its management."
Aurora has been on a shopping spree, announcing the purchase of greenhouse design firm Larssen Ltd. on Thursday morning and Quebec-based medical marijuana applicant H2 Biopharma Inc. later on Thursday evening.