Mergers and acquisitions
The marijuana space is already heating up with mergers and acquisitions ahead of recreational marijuana legalization expected in Canada later this year.
See Must-Knows before Investing in the Marijuana Industry to learn more.
Aurora acquires CanniMed
On January 24, Aurora Cannabis (ACB)(ACBFF) agreed to acquire CanniMed Therapeutics (CMED) for a total of 1.1 billion Canadian dollars in a cash and stock deal. Each CanniMed investor should receive 3.4 shares of Aurora cannabis or a combination of cash and stock. The cash consideration will be a maximum of $140 million. With the latter option, each CanniMed shareholder should receive 2.9493 shares of Aurora Cannabis and 5.7 Canadian dollars in cash, according to the company’s press release.
Aurora’s offer stood at 43 Canadian dollars per CanniMed share, up from 24, representing a 79% increase.
End of Newstrike deal
Following the acquisition by Aurora Cannabis, CanniMed terminated its arrangement agreement with Newstrike Resources. This move should lead to a breakup fee of $9.5 million to Newstrike Resources from CanniMed.
The market reacts
Following the announcement, CanniMed Therapeutic stock popped as much as 11.7% toward the end of the day. Aurora Cannabis dropped almost 5.5% on January 24. The above chart shows the three-month trend for Aurora and CanniMed stocks.