CanniMed Therapeutics Confirms Receipt of Unsolicited Offer from Aurora Cannabis
SASKATOON, Saskatchewan–(BUSINESS WIRE)–CanniMed Therapeutics Inc. (“CanniMed” or the “Company”) (TSX: CMED) urges shareholders to take NO action in response to Aurora Cannabis Inc.’s (“Aurora”) unsolicited offer to acquire all of the outstanding shares of the Company for consideration consisting of common shares of Aurora (the “Hostile Bid”).
As previously announced, CanniMed has formed a special committee of independent directors (the “Special Committee”) to consider the Hostile Bid. The Special Committee is reviewing the Hostile Bid, in consultation with its legal and financial advisors, and will respond in due course.
“We are very concerned that Aurora’s offer to our shareholders is based on an inflated Aurora share price, that 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,” said John Knowles, CFO, CanniMed. “The bid price referenced in the Hostile Bid is misleading in this context and there does not appear to be any premium in the offer for CanniMed shareholders when you adjust for Aurora’s recent share price increase. We further note that the bid price is capped at $24.00 but there is no lower limit, should Aurora’s share price weaken.”
“The Aurora management team has not demonstrated an ability to execute competently and consistently and there is serious concern that the Aurora share price will drop just as quickly as it has risen. There is no credible plan to deliver long term value to shareholders,“ said Brent Zettl, President and CEO, CanniMed. “In contrast, shareholders have an attractive and accretive transaction available to them now as CanniMed and Newstrike are extremely well positioned to deliver significant shareholder value going forward. As evidenced by the Health Canada regulatory directive announced on November 21, 2017, the clear drivers of greatest value will be branding and offering value added oil derivative products to the recreational market, two metrics where the CanniMed and Newstrike team are truly well positioned. The economics, particularly for the oils derivative products, are truly enormous,” continued Mr. Zettl.
CanniMed’s acquisition of Newstrike creates a premier global cannabis company. CanniMed, with 16 years of pharmaceutical cannabis cultivation experience with zero recalls or product shortages, married with Newstrike and Up Cannabis (in partnership with the iconic The Tragically Hip), will be well positioned with innovative, high quality products, two top tier distinct brands and a state-of-the-art infrastructure capable of capitalizing on key product trends, including the significant interest and uptake of cannabis oil derivatives such as vaporizer cartridges, and emerging drivers of growth in both the medical and recreational markets. The new company will have improved operational scale with a targeted 45,000 kg of capacity by 2019, improved capital markets presence and a pro-forma capitalization exceeding $600mm.
Mr. Zettl continued, “The only certainty for CanniMed shareholders is in the attractive and accretive Newstrike acquisition before them. We can understand why a deal with CanniMed makes sense for Aurora but it makes no sense for our shareholders.”
The Company is considering the appropriateness and legality of the irrevocable lock up agreements that Aurora obtained from shareholders in connection with the Hostile Bid. Such lock-up agreements, together with Aurora’s attempts to have the securities regulators shorten the 105 day minimum deposit period for the Hostile Bid, are unfair and coercive to the Company’s other shareholders and are an attempt to preclude such Company shareholders from having an effective voice in choosing the Newstrike transaction.
The Company has not received a copy of Aurora’s application to the securities regulators on this matter but believes that there is no basis for such application and intends to vigorously oppose it.
Shareholders are advised to take NO action on the Hostile Bid until they have received further communication from the Special Committee or the Board. Further details will be provided to shareholders as soon as practical.
Shareholders with questions should call CanniMed’s strategic shareholder services advisor, Kingsdale Advisors, at 1-888-518-1554.
Advisors
Kingsdale Advisors is acting as strategic shareholder and communications advisor. AltaCorp Capital Inc. is acting as financial advisor to the Board and Borden Ladner Gervais LLP is acting as legal advisor to the Board. Cormark Securities Inc. is acting as financial advisor to the Special Committee and Stikeman Elliott LLP is acting as legal advisor to the Special Committee.
About CanniMed Therapeutics Inc.
CanniMed is a Canadian-based, international plant biopharmaceutical company and a leader in the Canadian medical cannabis industry, with 16 years of pharmaceutical cannabis cultivation experience, state-of-the-art, GMP-compliant production process and world class research and development platforms with a wide range of pharmaceutical-grade cannabis products. In addition, the Company has an active plant biotechnology research and product development program focused on the production of plant-based materials for pharmaceutical, agricultural and environmental applications.
The Company, through its subsidiaries, was the first producer to be licensed under the Marihuana for Medical Purposes Regulations, the predecessor to the current Access to Cannabis for Medical Purposes Regulations. It was the sole supplier to Health Canada under the former medical marijuana system for 13 years, and has been producing safe and consistent medical marijuana for thousands of Canadian patients, with no incident of product diversion or recalls.
For more information, please visit our websites: www.cannimed.ca (patients) and www.cannimedtherapeutics.com (investors).
Notice Regarding Forward Looking Statements
This news release contains forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of CanniMed to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These forward-looking statements include, but are not limited to, statements relating to CanniMed’s expectations with respect to: the timing and outcome of the proposed acquisition of Newstrike; the anticipated benefits of the acquisition of Newstrike to CanniMed; improvements to CanniMed’s production capabilities and capacity resulting from the acquisition; and the Hostile Bid. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved.
In respect of the forward-looking statements and information concerning the anticipated benefits and completion of the proposed acquisition of Newstrike, CanniMed has provided such statements and information in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the ability of CanniMed to receive, in a timely manner and on satisfactory terms, the necessary regulatory, court and shareholder approvals for the Newstrike acquisition; the ability of the parties to the Newstrike acquisition to satisfy, in a timely manner, the other conditions to the closing of the transaction; and other expectations and assumptions concerning the acquisition. There can be no assurance that the proposed acquisition of Newstrike will occur, or that it will occur on the terms and conditions contemplated in this news release. Moreover, there is no certainty that the conditions in the offer by Aurora will be satisfied. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties.
Actual results could differ materially from those currently anticipated due to a number of factors and risks. Readers are cautioned that the foregoing list of factors is not exhaustive. The forward-looking statements contained in this news release are made as of the date of this release and, accordingly, are subject to change after such date.
CanniMed does not assume any obligation to update or revise any forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf, except as required by applicable law.
