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Shares in CanniMed were up 16 per cent by midmorning after shooting up 22 per cent directly after the news. Aurora was up half a per cent. Newstrike, which was left out of the deal, had its shares halted. The stock fell 20 per cent when trading resumed.

“We are very pleased to have come to terms with CanniMed on this powerful strategic combination that will establish a best-in-class cannabis company with operations across Canada and around the world,” Aurora chief executive Terry Booth said in a statement.

CanniMed had argued that Aurora’s earlier all-stock offer valued at up to $24 per share for the company was too low, given the wild upward swing in marijuana stocks in recent months.

Wednesday’s deal is the latest in a wave of consolidation in the sector ahead of legalization expected this summer.

Rival producer Aphria Inc. earlier this month announced a deal buy B.C. based Broken Coast Cannabis Inc., a transaction it valued at $230 million in cash and stock.

“This is by far the largest M&A transaction to occur in the cannabis space — so far,” said Russell Stanley, special situations analyst at Echelon Wealth Partners.

“The largest players have strong share prices to use as acquisition currency, and can afford to be aggressive on the M&A front. Scale might be one driver, but further M&A may also be powered by geographic or product development needs.”

Prior to the Aurora-CanniMed deal, the largest deal had been Canopy Growth’s 2016 friendly all-stock deal to acquire Mettrum Health Corp. valued at $430 million.