Aurora Cannabis Inc. to Acquire CanniMed Therapeutics Inc. for $1.1 Billion

Aurora Cannabis Inc. (TSX:ACB) has finally reached a deal with CanniMed Therapeutics Inc. (TSX:CMED) to acquire it for approximately $43 per share. What should you do now?

| More on:


Aurora Cannabis Inc. (TSX:ACB) and CanniMed Therapeutics Inc. (TSX:CMED) just announced that the two companies have entered a supportive agreement in which CanniMed’s board will support Aurora’s offer to acquire all of its issued and outstanding shares not already owned for a total consideration of approximately $1.1 billion.

So what?

The deal values CanniMed at approximately $43 per share, which represents a 181% premium over its closing price on November 14, 2017, the trading session prior to Aurora’s public disclosure that it would pursue a takeover of CanniMed. The deal also represents a 79% increase from its previous offer of $24 per share, which CanniMed strongly opposed, and a 14.6% premium to its closing price of $37.51 on Tuesday. 

The deal comes less than a week after the two companies reached an agreement to discuss a possible transaction, which was extended twice in order to give the two management teams enough time to complete the deal it just announced.

As a part of this deal, CanniMed has entered a termination agreement with Newstrike Resources Ltd. (TSXV:HIP), which it was in the process of acquiring as a way to prevent the takeover by Aurora, and this termination will result in a $9.5 million breakup fee that will be paid to Newstrike.

Now what?

I think this is a phenomenal deal for CanniMed’s shareholders, so I would most certainly vote in favour of it.

I also think this is a phenomenal deal for Aurora, because the combination of the two companies will create a powerhouse in the cannabis industry with the size and scale to compete with the other powerhouses, Canopy Growth Corp. and Aphria Inc.

With all of this being said, I think Foolish investors seeking exposure to the high-growth cannabis industry should strongly consider beginning to scale in to long-term positions in Aurora, Canopy, or Aphria over the next couple of weeks.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joseph Solitro has no position in any stocks mentioned.

More on Investing

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Top TSX dividend stocks are now on sale.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.

3 Safe Stocks for Branching Out of the TSX

Canadians who want to look beyond the TSX might want to snatch up safe stocks like Coca-Cola Co. (NYSE:KO) and…

Read more »

stock research, analyze data
Bank Stocks

Is EQB Inc’s Growth Sustainable?

EQB Inc (TSX:EQB) is possibly Canada's fastest-growing bank. Can it keep up the growth?

Read more »

Canadian Dollars
Dividend Stocks

1 Dividend Stock That Could Create $683.87 in Tax-Free Passive Income in 10 Years

You can earn massive passive income tax free from your TFSA. Here's how with your first dividend stock or GIC!

Read more »

Dividend Stocks

This 4.26% Dividend Stock Is My Top Pick for Immediate Income

Finding a great dividend stock is one thing, but growth in the near future is all but certain for this…

Read more »

edit Safe pig, protect money
Dividend Stocks

3 Dividend Stocks You Can Safely Hold for Decades

Are you looking for dividend stocks that can perform for the long term? These three stocks could earn safe and…

Read more »

tsx today
Tech Stocks

TSX Today: What to Watch for in Stocks on Thursday, September 21

Overnight declines in commodity prices and fears of elevated interest rates for longer could drive TSX stocks downward at the…

Read more »

Engineers walk through a facility.

Is Stantec Stock Still a Buy After Rising 144% in 3 Years?

Stantec stock has risen sharply as business fundamentals are booming. Is the stock too overvalued to buy now?

Read more »