Canadian marijuana producer Aurora Cannabis agreed to acquire CanniMed Therapeutics in a sweetened C$1.23 billion ($1 billion) cash-and-stock deal that would be the largest yet in the country’s red-hot cannabis industry.
Investors will get 3.4 Aurora shares for each CanniMed share, or they can accept cash limited in aggregate to C$140 million, the companies said Wednesday in a joint statement after Bloomberg News first reported the agreement. The deal values CanniMed at about C$50.29 a share, based on Tuesday’s closing price for Aurora of C$14.79. CanniMed closed at C$37.51.
In connection with the merger, CanniMed agreed to terminate a previously agreed takeover of Newstrike Resources Ltd. and will pay the company a C$9.5 million break fee.
“It has been quite a long road but it’s been well worth it,” Cam Battley, chief corporate officer at Aurora, said in a phone interview. “We’re going to create something new and very special in this sector.”
Share prices of Canadian growers have surged ahead of legalization, which is expected later this year. The country has at least 84 publicly traded companies tied to marijuana that trade on its exchanges, with a combined market valuation of C$36.9 billion.
In October, Constellation Brands Inc., the seller of Corona beer, announced the purchase of a minority stake in Canadian weed producer Canopy Growth Corp., marking the first major foray by an alcohol company into the industry.
CanniMed gained 20 percent to C$45 while Aurora fell 1.2 percent to C$14.97 at 9:32 a.m. in Toronto. Newstrike plunged 18 percent to C$1.50.