Pot pro­ducer at­tracts 56% pre­mium in stock-cash bid

Aurora Cannabis makes $24-a-share of­fer for Can­niMed

Stockwatch Daily - - FRONT PAGE - Mr. Terry Booth of Aurora Cannabis re­ports

AT THE re­quest of In­vest­ment In­dus­try Reg­u­la­tory Or­ga­ni­za­tion of Canada, Aurora Cannabis Inc. has dis­closed a pro­posal to ac­quire all of the is­sued and out­stand­ing com­mon shares of Can­niMed Ther­a­peu­tics Inc. The pro­posal was de­liv­ered to the board of di­rec­tors of Can­niMed on Nov. 13, 2017, and Aurora is seek­ing to pur­sue a mu­tu­ally agreed upon com­bi­na­tion with Can­niMed. Can­niMed has not yet en­gaged in ac­tive dis­cus­sions with Aurora; how­ever, Aurora wel­comes the op­por­tu­nity to do so. Aurora has re­quested

that Can­niMed’s board re­spond to the pro­posal prior to 5 p.m. PT on Fri­day, Nov. 17, 2017, fail­ing which, Aurora in­tends to com­mence a for­mal takeover bid for Can­niMed.

High­lights

• The all­share pro­posal, val­ued at $24 per Can­niMed share based on the clos­ing share price of Aurora on Nov. 14, 2017, re­flects a 56.9-per-cent pre­mium over the most re­cent clos­ing price of Can­niMed shares on Nov. 14, 2017;

• Ir­re­vo­ca­ble lock-up agree­ments with ap­prox­i­mately 38 per cent of Can­niMed share­hold­ers to vote in favour of Aurora’s pro­posal or ten­der to Aurora’s bid;

• The com­bi­na­tion would cre­ate a global leader in the cannabis in­dus­try with a pro forma mar­ket cap­i­tal­iza­tion ex­ceed­ing $3.0-bil­lion;

• Com­bined en­tity would serve ap­prox­i­mately 40,000 ac­tive reg­is­tered pa­tients;

• Aurora-Can­niMed com­bined would ben­e­fit from en­hanced ca­pac­ity for fu­ture growth with greater ac­cess to cap­i­tal and liq­uid­ity, with trad­ing vol­umes amongst the high­est in the cannabis in­dus­try.

Pur­suant to the pro­posal, Can­niMed share­hold­ers will be en­ti­tled to re­ceive a max­i­mum of $24 per Can­niMed share or 4.52586207 Aurora shares, based on the 20-day vol­ume-weighted av­er­age price of Aurora. Based on the clos­ing price of Aurora shares on Nov. 14, 2017, this trans­lates to 3.74415 Aurora shares for each Can­niMed share. Based on the clos­ing prices of Au rora and Can­niM ed on Nov. 14, 2017, this rep­re­sents a pre­mium of ap­prox­i­mately 56.9-per-cent pre­mium over the clos­ing price of Can­niMed shares on Nov. 14, 2017, and a 74.7-per-cent pre­mium over the 20-day vol­ume-weighted av­er­age price for the pe­riod ended Nov. 14, 2017. Upon com­ple­tion of the trans­ac­tions contemplated by the pro­posal, based on the clos­ing prices of Nov. 14, 2017, Can­niMed’s share­hold­ers will hold ap­prox­i­mately 16 per cent of the is­sued and out­stand­ing shares of Aurora.

“Aurora and Can­niMed are a great fit, truly com­ple­men­tary, and I am con­vinced we can gen­er­ate even greater value by com­bin­ing the two com­pa­nies and align­ing our ef­forts strate­gi­cally,” said Terry Booth, chief ex­ec­u­tive of­fi­cer. “Aurora has the man­age­ment ex­per­tise, cap­i­tal mar­kets strength, dis­tri­bu­tion chan­nels, brand power and growth prospects to suc­cess­fully in­te­grate Can­niMed into Aurora — the fastest-grow­ing cannabis com­pany with the sec­tor’s most ex­cep­tional ex­e­cu­tion track record.”

Lock-up of share­hold­ers of Can­niMed

In con­nec­tion with the pro­posal, Aurora has en­tered into ir­re­vo­ca­ble lock-up agree­ments in sup­port of its pro­posal from share­hold­ers rep­re­sent­ing ap­prox­i­mately 38 per cent of Can­niMed’s out­stand­ing shares. Un­der the lock-up agree­ments, the locked-up share­hold­ers are pre­cluded from ten­der­ing or vot­ing any of their Can­niMed com­mon shares in favour of any other ac­qui­si­tion pro­posal re­lat­ing to Can­niMed and are re­quired to vote against other ac­qui­si­tion pro­pos­als or ac­tions which might pre­vent, de­lay or frus­trate Aurora’s pro­posal.

Ad­di­tional de­tails

Read­ers are cau­tioned that Aurora may de­ter­mine not to pro­ceed with the pro­posal if: (i) it iden­ti­fies ma­te­rial ad­verse in­for­ma­tion con­cern­ing Can­niMed not pre­vi­ously dis­closed by Can­niMed; or (ii) Can­niMed im­ple­ments or at­tempts to im­ple­ment de­fen­sive tac­tics in re­la­tion to the pro­posal.

Should a takeover bid be com­menced, full de­tails of the of­fer will be in­cluded in a for­mal of­fer and the takeover bid cir­cu­lar to be filed with se­cu­ri­ties reg­u­la­tory au­thor­i­ties and mailed to Can­niMed share­hold­ers. The of­fer will be sub­ject to cer­tain con­di­tions, in­clud­ing, but not limited to, ac­cep­tance of the of­fer by Can­niMed share­hold­ers own­ing not less than 66-2/3rds per cent of the Can­niMed com­mon shares on a fully di­luted ba­sis. Once the 66-2/3rds-per-cent ac­cep­tance level is met, Aurora in­tends, but is not re­quired to, take steps to ac­quire all of the out­stand­ing Can­niMed com­mon shares and other con­vert­ible se­cu­ri­ties or rights to ac­quire Can­niMed com­mon shares.

We seek Safe Har­bor.

Karen Bax­ter con­densed this news re­lease (karenb@stock­watch.com).

Terry Dale Booth, Bruno Stephen Dobler, Ja­son Ronald Bradley Dyck, Barry Fish­man, Michael Singer, Adam Kel­ley Szw­eras

(ACB) Shares: 400,088,035

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