Both sides agree to lower price in Aphria takeover of Nuuvera
In an unusual move, licensed marijuana producer Aphria Inc. is cutting the amount of cash it is offering for cannabis company Nuuvera Inc. — from $1 to 60 cents per share — as Nuuvera seeks to fully acquire its subsidiary Avanti Rx Analytics.
Leamington, Ont.-based Aphria said Tuesday it reached an agreement with Toronto-based Nuuvera to lower the price but did not elaborate on why.
Nuuvera said in a separate release it agreed to the amendment “in order to fund” its own acquisition of the remaining 49 per cent interest of Avanti — which provides research and testing services to the cannabis industry — for an estimated $43 million. The company did not explain why receiving less money from Aphria would help fund its own transaction.
“The acquisition of Avanti is an important step in the history of Nuuvera and is expected to result in synergies at the combined Nuuvera/Aphria which will enhance the value of the arrangement to shareholders of Nuuvera,” said Ronald Schmeichel, Nuuvera’s chairman, in a statement.
Neither firm could be immediately reached for further comment.
Nuuvera said it entered into a letter of intent to acquire the remaining interest of Avanti from a single minority shareholder. As part of the deal, Nuuvera also anticipates acquiring Avanti’s facility in Brampton, Ont.
The original agreement was valued at $826 million, according to Aphria and Nuuvera’s Jan. 29 release. The revised offer, with the reduced cash component and using Aphria’s latest closing price of $14.06, based on 80.13 million outstanding Nuuvera shares, would be valued at $447.9 million.
Under the amended deal, Aphria is offering 60 cents in cash plus 0.3546 of an Aphria share. Nuuvera noted in its release “the consideration has been reduced … provided that the cash consideration will be increased to the extent the company’s unrestricted cash exceeds the revised required level.”
Shares of Aphria and Nuuvera have fallen since the original deal was first announced on Jan. 29. Aphria said Tuesday it also sought and received consent for the reduction from shareholders who had signed lock-up agreements.
Aphria added its financial adviser, Cormark Securities Inc., said the amendment is “fair, from a financial point of view, to Aphria.”