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TORONTO — Newstrike Resources Ltd. has confirmed that it has entered an exclusivity agreement with CanniMed, a Saskatoon-based producer of medical marijuana, about potentially combining the two businesses.

The Tragically Hip-backed company says it will continue to negotiate the proposed deal, which would see Newstrike shareholders receive 3.3 CanniMed shares for every 100 they hold in Newstrike.

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News of the proposed deal surfaced after Aurora Cannabis Inc. made an unsolicited takeover offer for CanniMed late Tuesday, giving the company a Friday deadline to decide.

CanniMed responded coldly to the all-share offer, saying it inflated Aurora’s value and urged shareholders not to tender their shares until the board has time to consider the offer.

Aurora said the all-share deal could be worth up to $24 a share for CanniMed shareholders and that it already has support from shareholders representing 38 per cent of CanniMed’s outstanding shares.

Newstrike’s share price was down about $0.10 or 16.4 per cent to $0.49 in midday trading on the TSX Venture. CanniMed’s share price was down $1.08 or 5.5 per cent to $18.72 on the TSX on a down day for cannabis stocks generally.