January 24, 2018 TSX: ACB TSX: CMED
Aurora Cannabis and CanniMed Therapeutics Agree to Terms on Friendly Transaction
CanniMed’s Board and Special Committee Support Aurora’s Offer of Shares and Cash
Edmonton, AB and Saskatoon, SK – January 24, 2018 -
Aurora Cannabis Inc. (“Aurora”) (TSX: ACB)
(OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) and CanniMed Therapeutics Inc. (“CanniMed”)
(TSX: CMED) announce today that they have entered into a support agreement (the “Support Agreement”)
whereby the Board of Directors and the Special Committee of the CanniMed Board have agreed to support
a new offer made by Aurora for the acquisition of all of the issued and outstanding shares of CanniMed not
owned by Aurora.
In addition to the Board and Special Committee, the new offer (“New Offer”), as
described below, will continue to be supported by certain CanniMed shareholders (the “Locked-up
Shareholders”) representing 36% of CanniMed’s outstanding shares and by Brent Zettl, President and CEO
of CanniMed.
Key Transaction Highlights
Under the New Offer, CanniMed shareholders may receive in respect of each CanniMed share, 3.40 Aurora
shares or a combination of cash and shares at the election of each CanniMed Shareholder, subject to proration
with the maximum aggregate cash consideration of $140 million.
Based on an implied Aurora share
price of $12.65 and the 3.40 exchange ratio, the New Offer would equate to $43.00, representing a 181%
premium over the closing price of CanniMed Shares on November 14, 2017, the last day prior to the public
disclosure of Aurora’s intention to pursue a combination with CanniMed, and a 79% increase to the
previous offer Cap Price of $24.00.
The total consideration for CanniMed under the New Offer is approximately $1.1 billion based on Aurora’s
implied share price of $12.65.
The maximum amount of cash available under the amended offer will be
$140 million, and the number of Aurora shares to be issued will be between approximately 72 million
(assuming full cash elections) and 84 million (assuming full share elections and no cash elections).
Assuming maximum cash elections, each CanniMed shareholder would receive $5.70 in cash and 2.9493
Aurora shares.
Support Agreement
The Support Agreement provides that CanniMed will support the New Offer and will recommend to its
shareholders in an amended directors circular that CanniMed Shareholders will tender to the Aurora New
Offer.
In addition to the foregoing, Aurora will receive customary non-solicitation protection and a right to
match any competing proposal made to CanniMed and a break fee payable to Aurora in certain
circumstances, together with customary representations and warranties.
In addition to the Locked-up
Shareholders(employees insiders) certain CanniMed shareholders representing approximately 15% of the issued shares of
CanniMed, including Brent Zettl, Chief Executive Officer, have agreed to support the New Offer.
The New Offer and the transaction are subject to customary closing conditions, including Canadian
Competition Act approval.
Termination of Newstrike Arrangement Agreement
In connection with the New Offer, CanniMed has entered into a termination agreement with Newstrike
Resources Ltd. (“Newstrike”), terminating the arrangement agreement between Newstrike and CanniMed,
resulting in the payment of a $9.5 million break fee paid to Newstrike.
As a result, the CanniMed
shareholder meeting originally scheduled for January 23, 2018 and adjourned to January 25, 2018 has been
cancelled.
Management Commentary
"We are very pleased to have come to terms with CanniMed on this powerful strategic combination that
will establish a best-in-class cannabis company with operations across Canada and around the world,” said
Terry Booth, CEO of Aurora. “Market recognition of Aurora`s continued performance and strategy
execution since we first announced our intention to acquire CanniMed allows us to share that benefit
directly with CanniMed shareholders by increasing the offer price, as well as by offering a cash component.
The amended offer includes value certainty and represents a full, compelling and immediate 75% premium
over CanniMed’s 20-day average price ending January 17, 2018, the day prior to CanniMed and Aurora
disclosing they were in discussions. Aurora now invites CanniMed shareholders to share in Aurora’s
ongoing growth, as we continue to create superior shareholder value, by joining with the CanniMed Board
of Directors and tendering their shares to our amended offer.”
Brent Zettl, President and CEO of CanniMed, added,
“A testament to the great team at CanniMed, this
transaction clearly confirms that the Company has been highly successful in becoming a preeminent global
leader in the medical cannabis industry. In this leadership position, CanniMed has provided invaluable
education, resources, support and relief of symptoms for thousands of patients served around the globe.”
“This is an excellent outcome for both Aurora’s and CanniMed’s shareholders after a hard-fought and
diligently negotiated process,” said Cam Battley, Aurora’s Chief Corporate Officer.
“We now look forward
to warmly welcoming CanniMed’s employees and forging one unified team.
Together, under the Aurora
banner we’ll continue to invest in domestic and international growth, and continue executing on our strategy
of building the most dynamic, innovative integrated cannabis company in the world.”
(Web Master Says...Watch if these are selling or buying CMED as the price fluctuates)
Advisors
Canaccord Genuity Corp. is acting as financial advisor to Aurora, McMillian LLP is acting as legal advisor
and Laurel Hill LLP is acting as strategic shareholder advisor. Kingsdale Advisors is acting as strategic
shareholder and communications advisor to CanniMed, AltaCorp Capital Inc. is acting as financial advisor
to the board of CanniMed and Borden Ladner Gervais LLP is acting as legal advisor to the board of
CanniMed. Cormark Securities Inc. is acting as financial advisor to the Special Committee of CanniMed
and Stikeman Elliott LLP is acting as legal advisor to the Special Committee.
| House Positions for C:CMED from 20180131 to 20180131 |
| 79 CIBC | 339,314 | 11,907,631 | 35.093 | 134,559 | 4,726,097 | 35.123 | 204,755 | -7,181,534 |
| 9 BMO Nesbitt | 278,555 | 9,778,509 | 35.104 | 76,920 | 2,691,802 | 34.995 | 201,635 | -7,086,707 |
| 13 Instinet | 167,075 | 5,864,746 | 35.102 | 109,000 | 3,825,338 | 35.095 | 58,075 | -2,039,408 |
| 90 Barclays | 9,700 | 339,250 | 34.974 | 1,900 | 66,757 | 35.135 | 7,800 | -272,493 |
| 80 National Bank | 16,684 | 586,720 | 35.167 | 9,390 | 327,751 | 34.904 | 7,294 | -258,969 |
| 19 Desjardins | 7,749 | 270,273 | 34.878 | 2,260 | 78,865 | 34.896 | 5,489 | -191,408 |
| 72 Credit Suisse | 3,900 | 135,517 | 34.748 | 0 | | 3,900 | -135,517 |
| 53 Morgan Stanley | 5,980 | 209,297 | 34.999 | 2,379 | 84,048 | 35.329 | 3,601 | -125,249 |
| 65 Goldman | 3,100 | 106,776 | 34.444 | 0 | | 3,100 | -106,776 |
| 99 Jitney | 25,800 | 906,757 | 35.146 | 22,800 | 801,588 | 35.157 | 3,000 | -105,169 |
| 68 Leede | 4,900 | 169,905 | 34.674 | 2,500 | 87,603 | 35.041 | 2,400 | -82,302 |
| 39 Merrill Lynch | 3,285 | 114,039 | 34.715 | 928 | 32,406 | 34.92 | 2,357 | -81,633 |
| 73 Cormark | 2,000 | 70,700 | 35.35 | 0 | | 2,000 | -70,700 |
| 57 Interactive | 1,823 | 61,225 | 33.585 | 50 | 1,705 | 34.10 | 1,773 | -59,520 |
| 143 Pershing | 1,010 | 35,295 | 34.946 | 56 | 1,959 | 34.982 | 954 | -33,336 |
| 76 Industrial Alliance | 1,385 | 48,677 | 35.146 | 500 | 17,750 | 35.50 | 885 | -30,927 |
| 124 Questrade | 2,602 | 90,513 | 34.786 | 1,734 | 59,954 | 34.576 | 868 | -30,559 |
| 74 GMP | 600 | 20,166 | 33.61 | 0 | | 600 | -20,166 |
| 14 ITG | 200 | 6,964 | 34.82 | 0 | | 200 | -6,964 |
| 89 Raymond James | 200 | 7,018 | 35.09 | 0 | | 200 | -7,018 |
| 59 PI | 233 | 8,226 | 35.305 | 90 | 3,163 | 35.144 | 143 | -5,063 |
| 56 Edward Jones | 75 | 2,550 | 34.00 | 98 | 3,438 | 35.082 | -23 | 888 |
| 88 Credential | 13 | 458 | 35.231 | 100 | 3,517 | 35.17 | -87 | 3,059 |
| 36 Latimer | 782 | 26,967 | 34.485 | 1,053 | 36,755 | 34.905 | -271 | 9,788 |
| 22 Fidelity | 2,743 | 96,105 | 35.036 | 3,563 | 122,733 | 34.447 | -820 | 26,628 |
| 28 BBS | 1,000 | 34,020 | 34.02 | 2,026 | 68,954 | 34.035 | -1,026 | 34,934 |
| 15 UBS | 0 | | 1,050 | 36,022 | 34.307 | -1,050 | 36,022 |
| 101 SG Capital | 7,900 | 277,477 | 35.124 | 9,200 | 322,346 | 35.038 | -1,300 | 44,869 |
| 83 Mackie | 0 | | 1,600 | 54,978 | 34.361 | -1,600 | 54,978 |
| 7 TD Sec | 108,025 | 3,792,583 | 35.108 | 109,909 | 3,851,354 | 35.041 | -1,884 | 58,771 |
| 33 Canaccord | 7,535 | 264,699 | 35.129 | 10,671 | 373,721 | 35.022 | -3,136 | 109,022 |
| 3 AltaCorp | 22,188 | 773,877 | 34.878 | 30,895 | 1,078,702 | 34.915 | -8,707 | 304,825 |
| 58 Qtrade | 1,462 | 51,507 | 35.231 | 10,548 | 367,410 | 34.832 | -9,086 | 315,903 |
| 1 Anonymous | 209,258 | 7,332,147 | 35.039 | 231,387 | 8,122,473 | 35.103 | -22,129 | 790,326 |
| 2 RBC | 46,627 | 1,625,824 | 34.869 | 82,561 | 2,827,966 | 34.253 | -35,934 | 1,202,142 |
| 85 Scotia | 13,774 | 478,571 | 34.745 | 105,450 | 3,707,592 | 35.16 | -91,676 | 3,229,021 |
| 77 Peters | 700 | 24,570 | 35.10 | 333,000 | 11,734,812 | 35.24 | -332,300 | 11,710,242 |
| TOTAL | 1,298,177 | 45,519,559 | 35.064 | 1,298,177 | 45,519,559 | 35.064 | 0 | 0 |
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