Curaleaf Just Announced a Hostile Takeover Bid for Aurora Cannabis. Here’s What This Means for Investors.

Aurora criticized key aspects of the bid, but will consider it.

The major appeal of Aurora is its strong medical marijuana business.

Marijuana’s effect on most humans is to make them more mellow and content. So it felt a little out of character when U.S. cannabis company Curaleaf (OTC:CURLF) launched a hostile takeover bid for its Canadian peer, Aurora Cannabis (NASDAQ:ACB) on Tuesday.

Curaleaf’s attempt is ambitious. Let’s take a look at what it’s offering, and how its play might affect investors in both companies.

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Curaleaf said it made its offer public to Aurora shareholders after several unsuccessful attempts to initiate direct discussions with company management.

The bid is a mix of cash and stock valued at $4 per share for Aurora. It breaks down into slightly over 0.34 of a Curaleaf share plus $0.75 in cash per one Aurora share. The American company said the total represents a juicy premium of 45% over the 30-day volume weighted average price of its Canadian peer (which, like Curaleaf, is traded both in this country and in our neighbor to the north).

Curaleaf pledged that if Aurora stock were to experience a “substantial rise” prior to the company’s acceptance of the offer, it would cap the total bid price at $5 per share.