Aurora (ACB.C) and CanniMed (CMED:C) Takeover- The Saga Continues

Aurora and CanniMed both claim victory today, as the OSC issues a ruling on both Aurora’s takeover bid and CanniMed’s poison pill strategy.

Today investors awoke from a turkey coma and boxing day hangover to the latest salvos on both sides. The Ontario Security Commission halted trading of any new shares of CanniMed and directed Aurora to put additional information into it’s takeover offer.

It’s the last part most interesting to me. It’s pretty rare for a regulator to come out and say there is information investors need to have. The money and lawyer people usually have all of those bases covered in a case like this one.

So It looks like Aurora may have been have been hit by blowback from it’s own attack.

Takeover Friendly Fire

Here’s what the OSC ordered them to add:

• The circumstances under which and means by which it became aware of a board meeting of CanniMed that was scheduled for Nov. 13, 2017;

• Any other information that was obtained directly or indirectly by Aurora from any person who was at the relevant time in a special relationship (as defined in applicable securities legislation) with CanniMed and that was material to Aurora in structuring, determining the timing of, delivering or implementing the offer;

• Any other information within Aurora’s knowledge that would reasonably be expected to affect the decision of securityholders of CanniMed to accept or reject the offer.

CanniMed’s howling about foul play and insiders manipulating the situation now has a little more credence. This OSC order makes it clear something doesn’t smell right – but they can’t prove criminality.

The upshot is CanniMed’s case that Aurora was playing silly buggers has some traction now, and a savvy investor needs to look over the dirty laundry and decide which kind of company they want to invest in.

What are they saying on the street

Both players popped out their own releases on schedule.

In their news release, Aurora notes it’s goals were to stop trading of the poison pill and to shorten the deadline for the deal.

It’s a partial win, in that the OSC has halted trading of the poison pill shares, but they did NOT cut down the deadline for CanniMed shareholders to consider the Aurora bid.

Here’s the quote that wins the Spin Award:

“Aurora has secured key legal victories that take us a big step forward towards acquiring CanniMed and integrating its team and operations into our organization to further build the pre-eminent global cannabis company…” – Terry Booth, CEO, Aurora Cannabis Inc.

CanniMed’s release outlines its own version of events centered on their ongoing efforts to eat Newstrike before they are potentially swallowed by Aurora, who will kill the deal.

CanniMed’s board don’t have a lot of avenues left. They’ve lost a powerful weapon, and now their only hope is their shareholders. Their release gives clear direction, and they have made it easy for the apathetic to help defeat the vote.

Here’s my favourite bit of spin from their release:

“CanniMed is also very pleased that the commissions, pursuant to their public interest jurisdiction, are requiring Aurora to issue a press release and to amend its takeover bid circular to correct disclosure deficiencies made in multiple press releases, as well as its takeover bid circular that the commissions determined would reasonably be expected to affect CanniMed shareholders’ decision whether or not to tender to the hostile bid.” – Ian Roberston, EVP Communications

What’s next?

The market now has to pick the better deal, CanniMed and Newstrike, or Aurora as the great borg of weed.

Will apathy be stronger than greed? On balance, no – but the CanniMed board is fighting hard for it’s company. Don’t count out ‘heart’. The way this plays out will set an important data point in this emerging market.

We’ll continue to watch, but if you have CanniMed stock, time to decide which vision of the future you want to see happen by January 19.