Curaleaf is aiming for leadership in the cannabis market by acquiring a competitor

Curaleaf Holdings, a medical marijuana producer whose 2018 IPO made its major shareholder, Boris Jordan, a billionaire, has announced plans to acquire its Canadian competitor, Aurora Cannabis. Curaleaf believes the combined company could become the leader in the cannabis market.

Curaleaf will launch a tender offer to acquire Aurora Cannabis shares directly from their owners, the company announced. For each share, it will offer 0.3 of its own shares and $0.75 in cash—for a total of $4. For comparison: at the close of trading on August 18, one Aurora share was worth $3.67. The entire company is valued at $290 million for the transaction.

The offer will remain in effect until December 2026, and Curaleaf has the right to extend or withdraw it, according to the statement.

Curaleaf did not conduct a business valuation of Aurora; the purchase offer is based on “publicly available information” about its Canadian competitor, according to the press release. The release states that Aurora has faced significant challenges due to reductions in medical cannabis reimbursement rates in Canada and their elimination in Germany, which have led to a decline in the scale and profitability of its business.

In Canada, prices have fallen by about 30% since April, causing Aurora’s revenue from this segment to drop by approximately 26% year-over-year to $27.7 million, the company reported in its latest quarterly earnings report. At the same time, it reported growth in medical cannabis sales in Germany, though it did not provide specific figures.

In addition, Aurora’s shareholders “have faced multimillion-dollar restructuring costs, billion-dollar write-offs, and the ongoing dilution of shareholders’ equity as a result of a share issuance program” at prices below Curaleaf’s offering price, the U.S. company claims. In February, Aurora announced amendments to its prospectus that allow it to sell new shares from time to time—for a total of up to $100 million.

All of this has led to a decline in the Canadian company’s stock price this year, according to Curaleaf. It believes that the merger will create the largest player in the cannabis market, with revenue of $1.5 billion. By the end of 2025, Curaleaf’s revenue had fallen by 5% to 1.27 billion.

Curaleaf stated that, before submitting its offer to Aurora’s shareholders, it had attempted to discuss the merger with Aurora’s board of directors, but the board refused to do so. Aurora denied the claim that it had refused to engage in dialogue. In a letter to shareholders published on August 11, the company stated that it had received two proposals from Curaleaf but considered the proposed price to be too low.

Curaleaf, formerly known as Palliatech, was founded in 2010 by banker William Todd, a neighbor of Boris Jordan, according to Forbes. Jordan himself was building a business in Russia at the time; in particular, he was one of the founders of the investment company Renaissance Capital and headed NTV.

At first, Jordan turned down his neighbor's offer to invest in Curaleaf, but after learning that "medical marijuana is not a drug," he became one of the first investors and later bought out the company almost entirely.

In 2018, it was one of the first companies in the industry to go public on a stock exchange in Canada, where marijuana was legal. For the deal, the company was valued at $4 billion, and Jordan, who retained a 34% stake after the listing, became a billionaire with a net worth of at least $1.4 billion, according to Forbes.

Curaleaf's market capitalization on the Toronto Stock Exchange currently stands at 3.4 billion Canadian dollars (about $2.45 billion), and on the over-the-counter market in the U.S., it stands at $2.4 billion.

Curaleaf’s stock has six ratings from Wall Street analysts, all of which are equivalent to a “buy” recommendation. The average price target of $13.90 is 51% higher than the stock’s most recent closing price.