Aurora seeks to quash CanniMed poison pill

Aurora Cannabis Inc. says it will try to strike down the poison pill standing in the way of its hostile takeover of CanniMed Therapeutics Inc.

Alberta-based Aurora, a licensed medical marijuana producer, said it would apply for a hearing before the Financial and Consumer Affairs Authority of Saskatchewan and the Ontario Securities Commission in an attempt to quash the shareholder rights plan Saskatoon’s CanniMed adopted earlier this week to try to keep Aurora’s proposal from reaching critical mass.

CanniMed has said the plan, otherwise known as a poison pill, would allow its shareholders to vote on its preferred deal, the proposed acquisition of Ontario-based cannabis producer Newstrike Resources Ltd. CanniMed is offering 33 of its shares for every 1,000 shares of Newstrike, with the companies trying to close the deal by January.

“The Poison Pill is oppressive and serves only to thwart Aurora’s compelling offer to CanniMed shareholders,” Aurora declared in a press release. “The adoption of the Poison Pill, for which (the) CanniMed Board would not dare seek shareholder approval, is unprecedented in its scope and scale, as it takes away the rights and choices of shareholders.”

Aurora also said that it has filed a complaint with securities regulators, alleging that CanniMed did not disclose, “certain important information regarding the Newstrike transaction.”

Aurora made an all-stock offer last month of up to $24 per share for CanniMed, an acquisition that would create a combined cannabis company with a market capitalization of more than $3 billion. CanniMed has responded by enacting the shareholder rights plan.

Prior to Aurora’s press release late Thursday, CanniMed fired off one of its own, accusing senior management and directors of Aurora of selling off $17.8 million of the company’s shares, “while at the same time trying to convince CanniMed shareholders and the market of their stock’s long-term value under their opportunistic and coercive hostile bid for CanniMed.”

“The most logical inference from what they have done is that they believe Aurora cannot and will not remain at its currently inflated valuation,” said Brent Zettl, president and chief executive of CanniMed, in a press release.

CanniMed said Zettl “has maintained his significant ownership interest in CanniMed.”

CanniMed has continued to tell its shareholders to take no action toward Aurora’s bid until hearing back from the firm’s special committee studying the Aurora deal.