In the midst of the hostile takeover attempt by Aurora Cannabis, CanniMed Therapeutics has adopted a shareholder rights plan – or “poison pill” – preventing Aurora from buying more shares or entering in any new lock-up agreements with current shareholders.
According to a press release, the purpose of the plan is to ensure CanniMed shareholders are not subject to coercive bids and allow them to vote on the proposed acquisition of medical cannabis producer Newstrike Resources. Aurora’s bid requires the Newstrike deal – which offers 33 CanniMed shares for every 1,000 Newstrike shares – to be terminated.
CanniMed is considering the hostile bid. The company has formed a special committee of independent directors to review the bid and the committee has approved the shareholder rights plan.
“The Company is very concerned that by secretly obtaining lock-up agreements from four of CanniMed’s shareholders, Aurora may be depriving shareholders of their ability to vote in respect of the Newstrike deal or may coerce them to accept the Hostile Bid,” CanniMed said in the release.
Aurora claims to already have support from 38 percent of Aurora’s investors; valuing CanniMed stock 57 percent over its Nov. 14 closing price. Aurora is offering shareholders Aurora stock worth C$24 per CanniMed share.
In a Financial Post report, Aurora Executive Vice-President Cam Battley claimed that CanniMed shareholders actually sought out Aurora “because they saw what was once the undisputed leader in this space simply slipping away,” calling CanniMed a “hobby company for its management team.”
A recent report by consulting firm EY found that 87 percent of Canada’s licensed producers believe the industry will significantly consolidate over the next three years.