TORONTO (Reuters) - Canadian cannabis producer CanniMed Therapeutics Inc CMED.TO said it has postponed a shareholder vote on its proposed takeover of Newstrike Resources Ltd HIP.V to allow it to discuss a possible transaction with hostile suitor Aurora Cannabis Inc ACB.TO.

Weed companies in Canada are engaged in a flurry of dealmaking and fund raising, as they position themselves to benefit from Canada’s planned legalization of the recreational use of marijuana in mid-2018.

Aurora, Canada’s second-biggest listed marijuana producer, valued at C$5.6 billion ($4.5 billion), launched its bid for CanniMed in November, and relations between the two have grown increasingly acrimonious since then.

Aurora has voiced strong opposition to its target’s planned acquisition of rival Newstrike, and CanniMed last week filed a C$725 million lawsuit alleging multiple claims of wrongdoing in relation to Aurora’s offer.

CanniMed, which had initially scheduled its shareholder vote on the Newstrike deal for Jan. 23, said in a statement on Thursday that it had postponed the meeting until Jan. 25, with the consent of Newstrike, to allow it to talk with Aurora.

CanniMed shares, which were halted ahead of the announcement, surged as much as 25 percent to a new record, and were trading up 14 percent at C$31.70 at 1:34 p.m. (1834 GMT). Aurora shares rose 4.5 percent to C$12.87. Newstrike, which was earlier halted, rose 25 percent to C$1.40.

“We’ve said all along that we’d be open to friendly discussion with them ... so perhaps there’s an opportunity for the two companies to create a combination that would be great together,” Aurora Chief Corporate Officer Cam Battley told Reuters.

Proxy advisors Glass Lewis and Institutional Shareholder Services have recommended that CanniMed shareholders vote in favor of the Newstrike deal, with Glass Lewis calling Aurora’s bid “a largely opportunistic attempt” to gain control of CanniMed on terms that are unfavorable to the target’s shareholders.

Aurora’s all-share offer was capped at C$24 per share. CanniMed stock has been trading above that level this week.

“My faith that the Aurora-CanniMed deal could complete is higher than it was a few days ago,” said Jason Zandberg, an analyst at PI Financial. But he added that “unless we see a precipitous fall-off in equity prices in the cannabis space, Aurora would have to increase their price.”

Newstrike shareholders on Wednesday voted overwhelmingly in favor of a CanniMed takeover.

Aurora and CanniMed have agreed to a standstill agreement until Jan. 21, under which neither will seek control of additional shares of CanniMed, or enter talks over an alternative transaction, CanniMed said.