Aurora Cannabis Inc., a key producer of medical marijuana in Canada, has decided to purchase CanniMed Therapeutics Inc., a leader across the Canadian Medical cannabis sector, for USD 852 million (1.1 billion Canadian dollars) in a cash & stock deal. Reliable sources have confirmed that it is the biggest merger witnessed across the country’s cannabis sector. As per experts, the strategic move will help both the pharma firms derive optimum benefits from the government’s decision to legalize the usage of recreational marijuana by July this year. It has, in fact, been estimated that the decision could lead to recreational marijuana sales worth nearly CAD 6 billion by 2021.
For the record, both these firms across the cannabis sector are trying to acquire a large chunk of the market share before the sale of the medicine becomes legal in the third quarter of this year. Industry analysts are of the view that the acquisition will help Aurora to increase the drug production, thereby assisting the firm in fulfilling the demand for medical cannabis across Canada. The deal apparently requires the approvals of both the government authorities & CanniMed stockholders. As per Aurora’s key officials, the company has already received the support of nearly 36% of the CanniMed’s investors.
According to the terms & conditions of the merger agreement, CanniMed has declared to end its already planned acquisition of Newstrike Resources Limited and offered it 14.1 million Canadian dollars as a break-fee. After the joint announcement of the merger deal, CanniMed stock prices rose by approximately 24% to 46.51 Canadian dollars, while that of Aurora increased by 2.1% to 15.10 Canadian dollars.
Sources say that the transaction will offer a market value of nearly 7.4 billion Canadian dollars to the merged entity. The market value of the combined entity is reported to have surpassed Canopy Growth Corporation’s market value of 6.7 billion Canadian dollars.