Aurora Cannabis Inc. (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today responds to the call by CanniMed Therapeutics Inc. CEO Brent Zettl for intervention by the Government of Saskatchewan to block Aurora's generous offer to acquire all issued and outstanding shares of CanniMed.
According to a December 8, 2017 report in the Saskatoon Star Phoenix newspaper, Mr. Zettl sent a letter to Members of the Saskatchewan Legislative Assembly, asking for the provincial government to intervene and stop the proposed transaction, which offers CanniMed shareholders a premium of 57% over the price at which CanniMed's stock was trading prior to Aurora's expression of interest. According to the Star Phoenix article, Mr. Zettl suggested that government support of CanniMed's management was needed to "keep jobs in the province, [ensure] our patients receive quality product when they need it, and [generate] the kind of returns our shareholders deserve."
Mr. Zettl's comments are misleading. CanniMed's facilities in Saskatchewan are a central element of Aurora's interest in CanniMed, and Aurora has previously stated publicly that the Company intends to continue to invest in and expand operations and employment in Saskatchewan. Such investment will include accelerating the pace of completion of CanniMed's expansion project, and elevating the quality of CanniMed's production practices and standard operating procedures to achieve European Union (EU) Good Manufacturing Practices (GMP) certification – which Aurora has already achieved at its Aurora Mountain facility in Cremona, Alberta.
With respect to shareholder returns, CanniMed's performance has been among the poorest in the cannabis sector. CanniMed's share price increased only 27.5% between its Initial Public Offering on December 29, 2016 and Aurora's offer to acquire CanniMed on November 13, 2017. By comparison, Aurora's share price increased by 180% over the same period.
The Star Phoenix reported that the Government of Saskatchewan rejected the CanniMed CEO's gambit, with a spokesperson stating that the Ministry of Economy "views this strictly as a commercial transaction, and will not be commenting further."
"This is the latest in a series of increasingly desperate schemes by CanniMed management that would have the effect of disenfranchising their own shareholders and preventing them from exercising their fundamental rights," said Terry Booth, CEO of Aurora. "We made a bona fide offer, featuring a compelling premium that 38% of existing CanniMed shareholders immediately supported and continue to support through lockup agreements, including two prominent Saskatchewan-based investment funds. We had hoped to make this a friendly and collaborative process, but Mr. Zettl refuses to even pick up the phone or return our calls to have a discussion. So we took our offer directly to CanniMed shareholders. In response, CanniMed's management and Board adopted several poison pills that will have the effect of diluting CanniMed's stock, draining the company's cash resources and directly taking money out of its shareholders' pockets. Now, management, in a last ditch effort, has tried and failed to use the provincial government to keep them in control and protect them from their own shareholders. That's not what I call acting in the best interests of their shareholders."
"We have very ambitious plans for CanniMed's footprint in Saskatchewan, including the establishment of a medical cannabis centre of excellence, supported by significant additional investment, employment and local economic development," added Mr. Booth. "It's time for Mr. Zettl to step aside and allow CanniMed shareholders and the Province of Saskatchewan to benefit from the Aurora-CanniMed combination and the creation of a powerhouse leader in the global cannabis sector."
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises Inc., is a licensed producer of medical cannabis pursuant to Health Canada's Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a 55,200 square foot, state-of-the-art production facility in Mountain View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot high-technology production facility known as "Aurora Vie" in Pointe-Claire, Quebec on Montreal'sWest Island, and is currently constructing an 800,000 square foot production facility, known as "Aurora Sky", at the Edmonton International Airport, as well as is completing a fourth facility in Lachute, Quebec through its wholly owned subsidiary Aurora Larssen Projects Ltd.
In addition, the Company holds approximately 19.18% of the issued shares in leading extraction technology company Radient Technologies Inc., based in Edmonton, and is in the process of completing an investment in Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1%. Furthermore, Aurora is the cornerstone investor with a 22.9% stake in Cann Group Limited, the first Australian company licensed to conduct research on and cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale importer, exporter, and distributor of medical cannabis in the European Union, based in Germany. The Company offers further differentiation through its acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry leaders, respectively, in the production and sale of proprietary systems for the safe, efficient and high-yield indoor cultivation of cannabis, and in state-of-the-art indoor gardening appliances for the cultivation of organic microgreens, vegetables and herbs in home and professional kitchens. Aurora's common shares trade on the TSX under the symbol "ACB".
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