Aurora Cannabis Doubles German Flower Output as It Fights Curaleaf’s Hostile Bid

Aurora Cannabis Inc. (NASDAQ: ACB) has finished a major expansion of its EU-GMP facility in Leuna, Germany, which more than doubles its expected annual flower output there. The site now has a new name, Aurora Horizon, and an expanded license from the Saxony-Anhalt state health authority that covers the new space. The news comes just days after Curaleaf Holdings (OTCQX: CURLF) raised its hostile takeover offer for Aurora to $5.00 per share.

Key Points

• Aurora’s Leuna facility, now called Aurora Horizon, is expected to produce more than twice as much flower each year.
• Aurora says it is one of only three licensed cannabis producers in Germany, one of its fastest-growing markets.
• Curaleaf’s enhanced offer values Aurora at $5.00 per share, with a cap of $6.00, and expires December 4.
• Aurora’s special committee has told shareholders to take no action until it reviews a formal revised bid.

Aurora Cannabis (NASDAQ: ACB) Scales Up Inside Germany

The multi-million-dollar expansion brings Aurora’s Canadian growing and post-harvest methods to Germany, along with plant strains developed at its Aurora Coast research facility in British Columbia. Aurora says the site is already meeting the performance standards of its other facilities.

Germany is a valuable market for licensed producers. Few companies are allowed to grow medical cannabis there, so most supply is imported. As a result, local production gives Aurora a sturdier supply chain and an advantage in serving German and European patients.

“Now known as Aurora Horizon, the EU GMP-licensed facility strengthens our ability to serve patients in Germany,” said Alex Miller, Aurora’s Executive Vice President of Operations and Supply Chain.

The expansion also builds on Aurora’s recent European growth. That includes a £2.1 million U.K. distribution deal and supply from Safari Flower’s new EU-GMP certification.

Curaleaf (OTCQX: CURLF) Raises the Stakes

Meanwhile, the takeover fight is still going. As PMV reported on Monday, Curaleaf raised its offer 25% to an implied $5.00 per Aurora share. Each share would get 0.4013 Curaleaf shares plus $1.00 in cash. Curaleaf also raised the cap on the offer to $6.00 and extended the deadline to 11:59 p.m. MT on December 4. Curaleaf says the combined company would be worth more than $3 billion, operate in 17 countries and save at least $40 million a year in costs.

Aurora has pushed back. It told shareholders to reject the original $4.00 bid as too low. Its special committee has now asked them not to tender any shares until a formal revised offer is filed and reviewed. “Curaleaf’s announcement is not a formal revised bid,” an Aurora spokesperson said.

Shares Trade Below the Offer Value

Aurora shares closed Wednesday at $4.46, about 11% below the implied $5.00 offer. That gap suggests investors are not sure the deal will close as proposed. With twice the output from its German facility, Aurora now has a stronger argument that it is worth more on its own.

Aurora Cannabis is a member of the PRISM Cannabis Index and has a market value of about $276 million.