CBC offers some interesting commentary ...
Growth strategy
While he has no personal knowledge of any deal in the works, Chris Damas, editor of investment newsletter The BCMI Cannabis Report, said in an interview Thursday that any tie up between the two companies would be very much in keeping with Aurora's strategy of growing by acquisition.
"I think Aurora has this complex that they have to be bigger than Canopy," Damas said, referring to Canopy Growth, the biggest pot company in Canada. "And the only guy that can get them bigger than Canopy is MedReleaf."
MedReleaf may be an easier takeover than previous targets, Damas adds, because only six people control more than 50 per cent of the company's 110 million shares.
"The people at MedReleaf see the writing on the wall, the six big shareholders, they say 'Look, I'd like to get out'," Damas says.
"If they can get a lockup, this deal can be done," he said. "It's not a slam dunk [but] that's what my guess is."
Personally I find those comments rather interesting. In part, because if this actually is a shareholder push by only 6 investors who collectively represent over 50% of outstanding shares, looking to cash in and get out, the terms could end up being quite different than the CanniMed deal.
Based on the information from all sources to date, Aurora didn't approach MedReleaf, MedReleaf approached Aurora along with all the other big players, shopping for a deal. This is a complete reversal from the CMED situation. Aurora is in the drivers seat. Rumours that the controlling interest is looking to exit won't drive up share value. If anything, it'll accomplish the opposite, especially if any discussions are prolonged. Looking beyond the minute-by-minute initial reaction in share prices, let's see what develops over the coming days. As opposed to an initial offer that turned hostile, this could very well develop into an initial deal shopping initiative by MedReleaf that turns very sour for their shareholders.
