Curaleaf Asks Canadian Regulator to Halt Aurora Share Sales During Takeover Bid
- Curaleaf Holdings has requested the Alberta Securities Commission to stop Aurora’s ongoing share sales during Curaleaf’s takeover offer, arguing the sales dilute shareholders and create obstacles for the acquisition.
- Curaleaf alleges that Aurora’s use of its at-the-market share program, which has issued approximately 2.81 million shares since June, is an improper defensive tactic that dilutes shareholder value and increases the cost of the takeover by over $11 million.
- Curaleaf highlights that these share issuances have diluted Aurora’s shareholders by about 4.9% since June and by roughly 10.8% since February, making it harder to reach the acceptance thresholds required for the takeover.
- The application challenges Aurora’s justification for the share sales, contrasting its cash-rich, debt-free position with the continued dilution, and requests an expedited hearing to halt further issuances under the program.
Curaleaf Holdings has asked the Alberta Securities Commission to halt Aurora’s ongoing share sales while its takeover offer remains outstanding, arguing that the sales dilute existing shareholders and create obstacles to the proposed acquisition.
The cannabis company announced September 14 that it filed an application seeking an expedited hearing and an order stopping further issuances under Aurora’s at-the-market share program. Such programs allow companies to raise money by selling newly issued shares into the market.
Curaleaf alleges Aurora is using the program as an improper defensive tactic. According to Curaleaf’s account of its application, Aurora has issued approximately 2.81 million shares at an average price of $3.04 in U.S. dollars since Curaleaf first expressed interest in a transaction in June.
Those issuances have diluted Aurora shareholders by approximately 4.9% and increased the amount needed to complete Curaleaf’s offer by more than $11 million, the company said. Curaleaf puts total dilution since the program began in February at approximately 10.8%.
“Every Share Aurora sells below the Offer price raises the same question: if management believes US$4.00 undervalues the company and the company has ample cash, why continue diluting its shareholders?” said Boris Jordan, Curaleaf’s chairman and CEO.
Curaleaf also argues that issuing additional shares makes it harder to reach the shareholder acceptance thresholds required for its offer to succeed.
The application points to Aurora’s previously stated intention to use proceeds from the program for strategic and accretive purposes. Curaleaf contrasted the continued share sales with Aurora’s public descriptions of itself as debt-free and holding approximately C$149 million in cash.
Curaleaf’s offer to acquire all outstanding Aurora shares is detailed in an offer to purchase and circular dated August 18.
The September 14 announcement did not include a response from Aurora or report a ruling by the commission. The allegations describe Curaleaf’s position in the takeover dispute.