Aurora, CanniMed & The Hip:
Laurel Hill’s Case Study in Canada’s First Hostile Cannabis Takeover
April 30, 2018
After a hard-fought, complex and headline-grabbing hostile takeover, Aurora Cannabis Inc. (“Aurora”) has now, pending completion of the compulsory acquisition process, completed its $1.1B acquisition of CanniMed Therapeutics Inc. (“CanniMed”). While the soon-to-be combined company and its shareholders now look forward to what promises to be an exciting journey ahead as Canada prepares for recreational cannabis legalization later this year, we wanted to take the opportunity to look back and study this transaction – Canada’s first unsolicited takeover bid in the cannabis space.
This was one of Canada’s most fascinating hostile takeovers in recent years. While it had many of the usual hallmarks of hostile takeovers, including heated charges of ‘opportunism’ and ‘entrenchment’ from both sides, it was most noteworthy for:
- The alternative CanniMed acquisition of Newstrike Resources Ltd. (“Newstrike”) available to CanniMed shareholders;
- CanniMed’s multiple defenses, including its tactical shareholder rights plan;
- Regulatory challenges by both sides – and the resulting rulings;
- Aurora’s capped share exchange offer;
- Cannabis stock price volatility after the launch of the bid and how it influenced shareholder support for the bid and the alternative Newstrike deal; and, of course,
- The ‘brand’ involvement of one of Canada’s most iconic bands, The Tragically Hip, a shareholder and supporter of Newstrike pursuant to a strategic partnership.