Why Curaleaf Wants Aurora—and Why the Market Still Doubts the Deal

By Rolando García, PhD, Chief Economic Columnist.

Aurora Cannabis (NASDAQ: ACB) filed its Directors’ Circular on September 2 and told shareholders to reject Curaleaf’s bid by doing nothing. The board chose the arguments our previous column anticipated, and put figures on them: Curaleaf (OTCQX: CURLF) carries over $1 billion of debt while Aurora carries none, the offer’s upside is capped, and Aurora holders would end up owning 7.7 percent of the combined company while holding 3.2 percent of the votes — 42 cents of voting weight for every dollar of economic exposure, in a company one man controls. Curaleaf answered the same day, followed a week later with a shareholder presentation attacking Aurora’s record under current management, and on September 14 escalated to a regulator.

Miguel Martin, Aurora’s chief executive, asked about the bid on BNN Bloomberg and remarked that it is clear why Curaleaf wants the company. For him, at least, the problem seems to be price and structure.

But Martin might be giving the wrong reason. 

His answer implies that Curaleaf is bidding because Aurora’s assets are exceptional, which is the flattering version. The assets might be good, but that’s not the binding constraint. Aurora has been chosen as a target by elimination, and the fact that it is targeted at all has to do with poor decisions and bad timing, as we will try to prove here.

What is actually being paid

Most coverage has reported the premium without the structure. Curaleaf is offering 0.3463 of a subordinate voting share plus US$0.75 in cash for each Aurora share, which it values at US$4.00, a 45 percent premium to Aurora’s US$2.75 thirty-day volume-weighted average price before the approach became public. 

The consideration is capped at US$5.00: if Curaleaf’s own twenty-day VWAP runs above C$17.05 at expiry, the share count falls to hold the value down. 

The bid needs more than half the outstanding shares excluding Curaleaf’s own, and Curaleaf has conditioned it on 66⅔ percent on a fully diluted basis — a bar it set for itself, well above the statutory floor. It expires at 5 p.m. Mountain Time on December 1. Across roughly 63 million shares, the whole thing comes to about US$253 million, against at least US$40 million of claimed annual cost synergies.

Then there is the balance sheet. Aurora holds US$109 million in cash, 43 percent of the entire purchase price. If we net the cash out, Curaleaf is paying about US$144 million for the operating business, against full-year medical revenue guided at C$269 to C$281 million — roughly US$196 to US$205 million. 

Seven-tenths of one year’s revenue for certified international medical infrastructure that cost billions to build.

Hold those two figures together, because the distance between them is the story. 

Forty-five percent over market is not an insulting offer. Seven-tenths of revenue is not a rich one. Both are true because the market had already marked this business far below what it would cost to replace. Which makes price the less interesting question. 

How does a company holding assets like these end up priced so that a generous premium is still cheap?

First a Super Aurora, then shrank

Between January 2017 and July 2018, Aurora bought Pedanios, then the largest distributor of cannabis to German pharmacies; launched a hostile bid for CanniMed Therapeutics; and acquired MedReleaf in an all-stock transaction worth C$3.2 billion, the largest cannabis deal anyone had done. 

By November 2018, the market valued it at about US$5.7 billion, among the three most valuable cannabis companies in the world, with funded capacity heading past 625,000 kilograms a year. Even Coca-Cola reported to be exploring an infused-beverage partnership that never happened.

The CanniMed episode is a close precedent for what is happening now. Back then, Aurora went hostile in November 2017 with a capped stock-and-cash offer. CanniMed’s board resisted, pursued an acquisition of its own as a defence, and ran the clock. In January 2018, the two sides settled at improved terms; the bid turned friendly, CanniMed’s board recommended it, and Aurora closed in May for about C$1.1 billion. 

A hostile offer with a cap became a negotiated offer at a higher price, which may be the only way the current bid gets real. Funny enough, Aurora’s management is being asked to reject a structure that Aurora, under different management, used to build the scale it is now defending.

Canada legalised adult use in October 2018, and the recreational market disappointed almost immediately. 

Provincial distributors overstocked, licensed prices could not compete with the illicit market, and wholesale prices fell by more than half from their 2018 highs. A company built to supply 625,000 kilograms was selling a fraction of that into a market that did not want it. Terry Booth, the founder, stepped down as chief executive in February 2020, and Martin took over with a mandate to make the company leaner, smaller, and profitable. 

By Curaleaf’s accounting, the shrinking cost roughly C$5 billion in impairments since fiscal 2021, more than C$480 million of negative operating cash flow, and a share price down 97 percent across Martin’s tenure. MedReleaf alone contributed more than C$2 billion of goodwill that was later written off.

What remains is a different company, with a far cleaner sheet than Curaleaf ever had. 

In its fiscal fourth quarter to March 2026, Aurora reported net revenue of C$84.8 million, of which medical cannabis was C$77.1 million, or 91 percent. It sold its controlling stake in Bevo in February, is exiting Canadian consumer cannabis, and now describes itself as a global medical company serving Germany, Poland, the United Kingdom and Australia from EU-GMP-certified indoor facilities in Canada and a licensed cultivator in Germany. 

Its balance sheet looks like a casino cage: heavy on cash and carrying no term debt.

It also went shopping this spring, buying Safari Flower in April to add certified cultivation capacity, on the explanation that EU-GMP supply is the main constraint on its European growth. 

Aurora had a timing problem throughout: it overbuilt in 2018 and overtrimmed in 2021, and it is now outmuscled by companies that started where it did. 

It is a consolidator that became a target.

Two criteria, two constraints

In his interview with IgniteIt, Jordan said Aurora’s value lies in two things: genetics and indoor cultivation. He wants EU-GMP capacity at scale, feeding Germany, Poland, and the United Kingdom, where Curaleaf already sells. Martin, from the other side of the table, describes the same asset. Bidder and target agree on what is being bought. They disagree on what it costs.

Besides Jordan’s two criteria, two further constraints bind: the target must be affordable for a bidder of Curaleaf’s size, and it must have no shareholder positioned to refuse. 

Each of the plausible companies fails a different one of the four.

1. Cronos Group fails on the blocking shareholder. It has more cash than anyone, about $822 million, and no debt. It also has Altria, which paid $1.8 billion for 45 percent in 2019. Cronos explored a sale in 2023 and had found no buyer by late 2025, which tells you what a tobacco company’s stake does to a process. It lacks a European medical footprint.

2. Organigram fails the same test, and far more decisively, because it would otherwise have been the natural competitor for Aurora’s assets. It closed the acquisition of Sanity Group, one of Germany’s largest cannabis companies, in April, and told IgniteIt last week it expects the German market to double. British American Tobacco took 19.9 percent in 2021 and has been accumulating ever since. Its most recent Schedule 13D/A reports 29.9 percent of the common shares plus every Class A preferred share Organigram has issued — preferreds that convert one-for-one at BAT’s option at no cost, with the ratio stepping up 7.5 percent a year, subject to a ceiling that stops BAT short of 49 percent. That is not a blocking stake in the ordinary sense. It is a standing option on control, held by a tobacco company, ratcheting upward while it waits. BAT also helped fund the Sanity purchase with C$65.2 million of fresh equity, which tells you which side of a sale it would take.

3. Village Farms fails the asset test. It operates what it calls the world’s largest EU-GMP certified cannabis facility. It is a greenhouse. Jordan said that, in terms of greenhouse product cannot match indoor quality and that his genetics need an indoor grower, which rules the company out on the one criterion he has stated most plainly.

4. Tilray fails on affordability. The stock was down 48 percent year to date as of August 19, and it carries substantial debt, but it is several times Aurora’s size. In this cycle, it is pruning and picking — it took HelloMD’s Canadian assets out of a court-supervised sale in June — rather than standing still as a target for a company of Curaleaf’s means.

Below that tier sit private European operators and smaller Canadian indoor growers, some of which are consolidating their share counts simply to stay listed. None offers Aurora’s combination of certified indoor capacity, existing German and Polish distribution, a clean balance sheet, and a register with nobody in it larger than about two percent.

Aurora is the only public company that passes all four.

Possible alternatives

There is no comparable plan B, which is a point in Aurora’s favour and a reason to expect a higher price before December 1.

Curaleaf’s realistic fallbacks are slower and smaller. It already operates three EU-GMP facilities in Portugal, Spain, and Canada, and its international revenue grew 63 percent to $172.5 million in 2025. It can keep building organically, or do Safari-sized deals, one facility at a time. It can pursue private European operators, several of them available at valuations that would have been unthinkable in 2021 as Canadian producers have wound down their European operations. And it can withdraw, let the register keep migrating toward professional holders, and return next year, since a bolt-on costing under a tenth of its equity leaves that option open.

What it cannot do is find another company like Aurora, whose assets were built with bubble-era capital in 2017 and 2018, then priced by six years of retrenchment and C$5 billion of write-downs.

Aurora’s alternatives run through the same filter in reverse. Any white knight has to be larger than Aurora, able to use indoor EU-GMP capacity, and either unblocked or willing to bring its blocker along. 

Organigram with BAT’s money fits that description better than anyone, and a pharmaceutical entrant is the long-run buyer European operators are positioning themselves for. Martin says the board is evaluating options and, when asked whether another offer could emerge, did not say no. 

Aurora has retained Kingsdale Advisors and stood up a shareholder campaign at ProtectAurora.com, which is what a board does when it intends to run a process rather than merely decline one.

The share count is now the battlefield

One dimension is relevant for this contest: the clock. 

Under Canadian take-over bid rules, the deposit period runs 105 days, which is why a bid launched on August 18 expires on December 1, but a target board can shorten it to as few as 35 days by issuing a deposit period news release. 

Aurora has not issued one. A board confident its shareholders will refuse could compress the timetable and end the distraction. Every additional day is a day in which a competing bid can surface.

It is also a day in which Curaleaf’s threshold has to be met. I’ve seen a couple of articles consistently understating the difficulty of this task. Some accounts of this bid report that it needs a simple majority of the shares Curaleaf does not already own. But that is the statutory floor, not this offer’s condition. Curaleaf conditioned the bid on 66⅔ percent on a fully diluted basis, a bar it chose for itself well above what the rules require, and two-thirds is the number that must be cleared on December 1. It has to come out of a register held mostly by retail investors, each of whom does better refusing and keeping a share in the improved company than tendering, and none of whom has any way to coordinate with the others. That is the free-rider problem we discussed in the first column, and it is Aurora’s strongest structural defence.

What happened on September 14 is not relevant; I beg to differ with most of the articles written regarding the fact that Curaleaf asked the Alberta Securities Commission to shut Aurora’s at-the-market equity programme for the duration of the bid, and to find the share sales an improper and abusive defensive tactic. 

If that is a defensive tactic, it is a very poor one. Since Curaleaf first approached in June, Aurora has issued roughly 2.81 million shares at an average of US$3.04, adding about US$11 million to the cost of buying the company. 

That means they are not selling below the value of the company; they are just selling at what the market more or less has to offer.

Aurora’s unaffected price was US$2.75, and the stock has traded near US$3.70 since the bid went public, so an average of US$3.04 implies the large majority of those shares were sold before August 11, while the approach was still private — when halting an established programme would itself have been a decision taken on inside information. 

The selling that continued after the offer was public is the part that matters. Curaleaf’s aggregate is built to keep the two indistinguishable.

The defence available to the board is that a minority share in the float and a hundred percent of the company are different goods at different prices, which is why control trades at a premium everywhere. 

It is not a board defending itself improperly, nor one contradicting its own valuation. It is a board that left an equity program running through a takeover approach and a public bid, thereby giving its bidder another argument to use against it.

What the market thinks

Aurora closed around US$3.74 on September 11. I’ve seen colleagues indicating that figure as the bid getting done. I think it’s the opposite. 

At Curaleaf’s current price, the consideration is worth roughly US$4.06 a share, so Aurora is trading at an eight percent discount to the value of the offer — better than thirty percent annualised over the ten weeks to expiry. A market expecting a bump does not leave that on the table.

What a spread that wide prices in is doubt about completion, and it is a reversal from the slightly positive spread we noted when this began, which read then as an expectation of improved terms. 

The 66⅔ percent condition is the likeliest explanation: arbitrageurs can see that the bar sits well above the statutory minimum, that the register is retail and uncoordinated, and that a bidder who set his own threshold that high has given himself a way to walk. 

The contest runs to December 1. 

Aurora’s board is not obliged to do anything before then, and on the evidence of 2018 that is precisely how this kind of bid gets repriced. 

But it enters the final stretch with a strong argument about its assets and a weak record on its own conduct, and it is the second of those that a regulator will be looking at first.