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Buzz on the Bullboards: what’s up with Aurora?

Stockhouse Editorial
0 Comments| November 15, 2017


Click to enlargeCannabis is back on top – at least on the Stockhouse Bullboards. One week ago, the last edition of Buzz on the Bullboards reported that Canopy Growth Corp (TSX: WEED, OTCQB: TWMJF, Forum) had been continuing to dominate discussions on the Bullboards. While WEED remains a presence in the Stockhouse Top-10, another cannabis company has really been stoking investor interest recently.

Click to enlargeAurora Cannabis Inc. (TSX: ACB, OTCQB: ACBFF, Forum) has also been a dominant presence on the Bullboards in recent weeks, but over the past week it has taken over top position in the rankings. As mentioned in the last Buzz on the Bullboards; along with WEED and some other cannabis plays its share price has exploded higher over the past month. With a commensurate rise in market cap, ACB’s management was wasting little time trying to leverage that higher share price.

Click to enlarge

Click to enlargeTo understand “what’s up with Aurora” requires looking a little further down the list of the Top-10. In the 5th position in today’s report is Cannimed Therapeutics Inc. (TSX: CMED, OTCQB: CMMDF, Forum), a new name in the Top-10. Experienced cannabis investors may recognize CMED as the original supplier of medicinal cannabis in Canada for Health Canada.

With Cannimed’s cultivation experience and expertise in producing cannabis oils, Aurora has made an unsolicited take-over offer to Cannimed. This is where the story heats up, and the details become a little harder to follow – perfect fodder for discussions on the Bullboards.

Click to enlargeTo begin with, Cannimed is also involved in a pending acquisition: a friendly deal with Newstrike Resources Ltd. (TSX: V.HIP, OTCQB: NWKRF, Forum). Attentive readers will spot Newstrike in the #9 position – another newcomer to the Bullboard rankings.

Newstrike Resources is also an ACMPR-licensed cannabis company. Among its more notable transactions was a strategic partnership with Canada’s “The Tragically Hip” for a licensing deal with Newstrike’s cannabis products. Throwing a wrench into Cannimed’s plans is the unsolicited offer from Aurora.

In its press release, Aurora notes that its pending offer for Cannimed of $24/share represents a 56.9% premium over CMED’s most recent closing price (November 14, 2017). Aurora claims to have lock-up agreements encompassing 38% of Cannimed shareholders.

In its own press release, Cannimed fired back. Its management noted the recent run-up in Aurora’s share price, and offered these observations.

CanniMed cautions that the share consideration (or equivalent share value) offered by Aurora in its press release is inflated and CanniMed believes over values Aurora in that it is based on the closing price of the Aurora shares on the TSX on November 14, 2017, which reflects an increase of 124.9% over Aurora’s closing price on the TSX over the preceding 12 trading days (Aurora’s closing share price on October 27th, before the recent run-up, was $2.85 which implies a value of $12.90 per CanniMed share at the Exchange Ratio. CanniMed’s closing price on October 27th was $11.53).
 
Traders weren’t concerning themselves with such details. In light of Aurora’s offer, CMED’s share price was bid up to $19.80 by the close – a nearly 30% rise on the day.
 
Aurora Cannabis wants to buy Cannimed Therapeutics. Cannimed’s management is cautioning its shareholders to take no action until its Board has had time to prepare a response to this unsolicited offer. Meanwhile CMED continues to move forward on its acquisition of Newstrike.
 
It's a cannabis soap opera, and for investors, there is no better place to bat around the issues, facts, and rumors than on the Stockhouse Bullboards.

 
FULL DISCLOSURE: Cannimed Therapeutics Inc. is a paid client of Stockhouse Publishing.

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