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May 14, 2018

'It had to be done': Aurora Cannabis buying MedReleaf for $3.2B in stock

Aurora Cannabis to acquire MedReleaf for $3.2B in all-stock deal

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Aurora Cannabis (ACB.TO) announced on Monday it has struck a deal to acquire MedReleaf (LEAF.TO) in an all-stock takeover valued at $3.2 billion.

MedReleaf shareholders will get 3.575 Aurora shares for each share held.

Subsequent to the deal closing, Aurora shareholders will own 61 per cent of the combined cannabis company.

"This is a transformational transaction that brings together two pioneering cannabis companies, both committed to high technology, high quality and low cost production, to create a powerful platform for accelerated growth and success on a global scale," said Aurora CEO Terry Booth in a press release.

"Our complementary assets, strategic synergies, and strong market positioning will provide us with critical mass and an excellent product portfolio in preparation for the adult consumer use market in Canada."



The announcement doesn't come as a total surprise to the market after The Globe and Mail earlier reported Aurora made a friendly offer for MedReleaf, which prompted the two companies to disclose their talks in press releases on May 3.

The takeover agreement allows for an $80-million break fee, plus an additional $15-million reimbursement fee in certain circumstances. If a superior bid is presented for either MedReleaf or Aurora, the other company will have five business days to match it.

"By combining with Aurora, an integrated producer with an exceptionally strong track record for execution, and deep domestic and international distribution capabilities, we will be ideally positioned to set the global standard for our industry at a pace that will be difficult to match," said MedReleaf CEO Neil Closner in a release.

Based on their values as of the close of trading Friday, Aurora and MedReleaf would have a combined market capitalization of a little more than $7 billion.

“If we don’t do this now, we’d be doing it later at a higher price,” Booth told reporters at a news conference in Toronto late Monday morning. “It had to be done, and we’ve talked about it for a long time. It was about time we got it done.”

BMO Capital Markets served as financial advisor to Aurora on the deal, while Canaccord Genuity advised MedReleaf.

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