Aurora Cannabis will buy medical marijuana firm MedReleaf for $3.2 billion in stock, cementing the company’s status as the biggest company in the fast-growing cannabis space.
The two companies had been linked in talks for weeks, but both said nothing was imminent when rumours first emerged earlier this month.
Something seemed to have changed over the weekend, as the two companies announced a merger on Monday morning.
The deal will see Aurora, which was valued at $4.5 billion on Friday, offer MedReleaf shareholders 3.575 shares in Aurora in exchange for every share in MedReleaf that they hand over.
At current market prices, that places the value of MedReleaf at $29.44 per share or $3.2 billion in total — an 18 per cent premium to where the company was valued on Friday.
The combined firm could be worth as much as $7 billion. That’s enough to leapfrog Aurora past Canopy Growth Corp. for the top spot.
Aurora has grown to become the biggest pure play cannabis company in the world, largely through acquisition. MedReleaf, meanwhile, has grown steadily primarily by focusing on the medical marijuana sector.
The board’s of both companies have already endorsed the deal, but two-thirds of MedReleaf owners have to give their OK, and half of Aurora’s, in order to make it official. If and when that happens, the combined company would have nine facilities in Canada and two in Denmark, enough to produce 570,000 kilograms of cannabis per year.