Shares of Canadian marijuana companies rose Wednesday after two Canadian regulators rejected Aurora Cannabis’s request to shorten the minimum deposit period to 35 days from 105 days for its hostile takeover of CanniMed Therapeutics Inc.
Aurora’s request, if approved, would have increased the likelihood of the hostile takeover by preventing CanniMed’s bid to buy Newstrike Resources Ltd.
Alberta-based Aurora offered to buy CanniMed for $24 per share in Nov. 24, but within days CanniMed adopted a shareholder rights plan, or a “poison pill”, viewing the offer as “coercive”.
Earlier this month, CanniMed approached the regulators to declare Aurora’s decision to take the buyout offer directly to CanniMed shareholders as an insider bid.
The regulators also rejected CanniMed’s request to consider the offer as an insider bid.
An insider bid is a takeover offer made by a company insider or their affiliates within a year before the bid. Canadian securities laws demand disclosure, review and approval processes in the event of such a bid to protect minority shareholders.
In response to Wednesday’s announcement, CanniMed was up 4.7 per cent to $20.89 in mid-afternoon trading, while Aurora was up 9 per cent to $7.86.
Meanwhile, Canopy Growth Corp. was up 17 per cent and Cronos Group Inc. rose 19 per cent. Cannabix Technologies Inc., THC Biomed Intlernational Ltd and Aphria Inc. all rose 10 per cent. OrganiGram Holdings Inc. was up 6 per cent.
A decision to shorten the minimum deposit period would have tested Canada’s rules for hostile takeover bids, leaving less time for the target company to react to the acquisition
The marijuana industry has seen a lot of M&A activity as it prepares for legalization in 2018.
Canopy Growth Corp plans to acquire some assets of Green Hemp Industries. In June, Organigram Holdings acquired Trauma Healing Centers.