CanniMed Formally Announces Definitive Agreement to Acquire Newstrike Resources

CanniMed to Acquire Up Cannabis Inc. (Newstrike Resources Ltd. – TSX-V:HIP) to Create a Premier Global Cannabis Company

November 17, 2017

SASKATOON, Saskatchewan & OAKVILLE, Ontario–(BUSINESS WIRE)–CanniMed Therapeutics Inc. (TSX: CMED):

Transaction Highlights

  • Combining the leading medical brand and a high profile recreational brand to create a premier global cannabis company
  • Well positioned to offer innovative, high quality products with two top tier distinct brands uniquely positioned to address key product trends and emerging drivers of growth in both market segments
  • CanniMed and Up Cannabis will leverage infrastructure and expertise across both platforms to drive strong synergistic value while focusing on being leaders in their distinct markets, with best-in-class production and marketing practices
  • Expected to be accretive (before synergies) on key metrics by 2019
    The Tragically Hip remain intimately involved as shareholders and active participants in the creation and support of the Up Cannabis brand
  • Significantly improves operational scale with a targeted 45,000 kg of capacity by 2019 and market breadth
  • Improved capital markets presence with a pro-forma capitalization exceeding $500mm
  • Newstrike shareholders to receive 33.0 CanniMed shares for each 1,000 shares of Newstrike

CanniMed Therapeutics Inc. (TSX: CMED) (“CanniMed”) and Newstrike Resources Ltd. (TSX-V: HIP) (“Newstrike”) are pleased to announce that they have reached a definitive agreement (the “Arrangement Agreement”) pursuant to which CanniMed will acquire all of the outstanding shares of Newstrike (the “Arrangement”), parent company of Up Cannabis Inc. (“Up Cannabis”), a licensed producer of cannabis under the Access to Cannabis for Medical Purposes Regulations (ACMPR).

This is a transformational strategic acquisition for our company, which will position CanniMed and Up Cannabis together as premium players in the emerging recreational cannabis marketplace, while equally staying true to our mandate to provide the best treatment and care to medical patients. Together, we recognize the importance of brand loyalty and will continue to build products, programs and resources to showcase our leadership in the cannabis arena.

Brent Zettl, President and CEO, CanniMed

Jay Wilgar, President and CEO of Up Cannabis, stated: “This is a watershed moment for Up Cannabis as we prepare for the opening of the recreational cannabis market opportunity in 2018. This business combination with CanniMed positions our collective team as a clear market leader, and we will work tirelessly to ensure that we keep building a brand and product offering that resonates unequivocally with the market.”

The Arrangement will be by way of a plan of arrangement pursuant to which each Newstrike shareholder will receive 0.033 CanniMed shares in exchange for each Newstrike share held. Subsequent to closing of the Arrangement, the current CanniMed shareholders will own in aggregate approximately 65 per cent of the combined entity and the Newstrike shareholders will in aggregate own approximately 35 per cent of the combined entity.

Completion of the Arrangement is subject to the approval of shareholders of both companies at special meetings of the shareholders of each company. Newstrike will require the approval of 66 2/3 per cent of the shareholders that vote, by person or in proxy at the meeting, as well as a simple majority of the shareholders that vote, by person or in proxy, at the meeting, excluding certain insiders. CanniMed will require the approval of a simple majority of the shareholders that vote, by person or in proxy, at the meeting. Both companies will be communicating the timing and conduct of those meetings which are expected to be scheduled for early January 2018. Closing of the transaction is anticipated to occur in January 2018.

Arrangement Summary

The Arrangement Agreement provides that Newstrike shareholders will be entitled to receive 0.033 common shares of CanniMed for each Newstrike common share held, representing consideration of approximately C$0.505 per Newstrike common share based on the closing price of CanniMed common shares on November 14, 2017. Upon closing of the Arrangement, Newstrike will become a wholly‐owned subsidiary of CanniMed.

The Arrangement Agreement provides that both parties are subject to non‐solicitation provisions and provides that the board of both companies may, under certain circumstances, terminate the Arrangement in favour of an unsolicited superior proposal, subject to the payment of a termination fee of C$5 million by Newstrike to CannMed or C$9.5 million by CanniMed to Newstrike, as the case may be. In addition, the Arrangement Agreement includes provisions providing for expense reimbursement of up to $600,000 from one party to the other in the event that the agreement is terminated under certain circumstances.

The Arrangement Agreement provides that on closing of the Arrangement, the board of directors of the combined entity will include two persons who will be nominated by Newstrike. In addition, certain shareholders of Newstrike will be entitled to nominate two persons to the CanniMed board of directors at its 2018 annual shareholders’ meeting and will have a right to nominate one person to the board at each annual meeting for so long as they hold at least 10 per cent of the outstanding CanniMed shares.

Under applicable TSX rules, the transaction requires the approval of CanniMed shareholders by a majority vote, as the number of CanniMed common shares to be issued exceeds 25 per cent of the total number of outstanding CanniMed common shares.

Closing remains subject to approval of the shareholders of both CanniMed and Newstrike, court approval, the approval of the TSX, applicable regulatory approvals and the satisfaction of certain other closing conditions customary in transactions of this nature.

The Arrangement Agreement contains other customary representations, warranties, covenants and conditions to closing. Additional details of the Arrangement is expected to be provided to Newstrike and CanniMed shareholders in respective information circulars to be mailed in late 2017.

Board Recommendations

The definitive agreement has been approved by the Board of Directors of each of CanniMed and Newstrike and the Boards each recommend that their respective shareholders vote in favour of the Arrangement.

Financial and Legal Advisors

AltaCorp Capital Inc. is acting as financial advisor to CanniMed and has provided a fairness opinion to the CanniMed Board of Directors with Borden Ladner Gervais LLP acting as legal advisor to CanniMed. Cormark Securities Inc. has provided a fairness opinion to the CanniMed Board of Directors.

The Aurora Proposal

On November 15, 2017, CanniMed issued a press release responding to a press release from Aurora Cannabis Inc. (“Aurora”) regarding its intention to make an unsolicited offer for all of CanniMed’s shares. Since the date of that press release, Aurora has not made a formal offer for CanniMed’s shares.

As no formal offer has been made, CanniMed continues to advise shareholders to take NO action with respect to the unsolicited proposal.

In making its recommendation to shareholders to vote in favour of the Arrangement, the Board of Directors of CanniMed considered, among other things, the following:

(i) the Newstrike acquisition is accretive and is a highly strategic entry into the recreational cannabis market;

(ii) the terms of any Aurora offer are unknown, whereas the transaction with Newstrike has been fully negotiated and contains only reasonable conditions to closing.

CanniMed will respond to the Aurora proposal if a formal offer is made.

Conference Call Information

CanniMed and Newstrike will host a conference call and a webcast accompanied by slides to discuss the transaction on Monday, November 20, 2017 at 10:00 AM EST. Analysts, investors and media are invited and welcome to participate. Advisory with contact information will follow Monday pre-market.

About CanniMed Therapeutics Inc.

CanniMed is a Canadian-based, international plant biopharmaceutical company and a leader in the Canadian medical cannabis industry, with 16 years of pharmaceutical cannabis cultivation experience, state-of-the-art, GMP-compliant production process and world class research and development platforms with a wide range of pharmaceutical-grade cannabis products. In addition, the Company has an active plant biotechnology research and product development program focused on the production of plant-based materials for pharmaceutical, agricultural and environmental applications.

CanniMed, through its subsidiaries, was the first producer to be licensed under the Marihuana for Medical Purposes Regulations, the predecessor to the current Access to Cannabis for Medical Purposes Regulations. It was the sole supplier to Health Canada under the former medical cannabis system for 13 years, and has been producing safe and consistent medical cannabis for thousands of Canadian patients, with no incident of product diversion or recalls.

For more information, please visit our websites: (patients) and (investors).

About Newstrike and Up Cannabis

Newstrike is the parent company of Up Cannabis, a licensed producer of cannabis that received its cultivation license on December 19, 2016. Newstrike, together with its strategic partners, is developing a diverse network of high quality cannabis brands. For more information visit or

Original press release

Published by NCV Newswire
NCV Newswire
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