It was probably the nastiest battle in the marijuana industry ever. And now it's over.

On Wednesday, Aurora Cannabis (NASDAQ:ACB) and CanniMed Therapeutics (NASDAQOTH: CMMDF) announced that they had reached an agreement for Aurora to buy CanniMed in a "friendly transaction." There wasn't much friendliness between the two companies over the past few months, though, with CanniMed fighting tooth and nail to prevent a takeover.

Aurora appears set now to finish what it started in November, when the company first announced its plans to acquire CanniMed. But did the winner in this deal really win? 

Man drawing big fish about to eat little fish

Image source: Getty Images.

Paying up

Originally, Aurora's plan was to buy CanniMed for $24 per share. The price tag now, however, equates to $43 per share, or roughly $1.1 billion in total (in Canadian currency). There's a little bit of math involved in that figure, though, because CanniMed shareholders will be able to choose between receiving 3.4 shares of Aurora stock or a combination of cash and Aurora shares.

There's no question about whether CanniMed shareholders win with this deal. The new purchase price reflects a 181% premium over CanniMed's closing price the day before Aurora announced its intention to acquire the smaller company.

For Aurora shareholders, on the other hand, there could be questions about the ultimate cost of the CanniMed buyout. Investors appeared to have some mixed emotions over the agreement, with Aurora stock first rising on the news, but ending the day on Wednesday down nearly 5%.

Let's crunch some numbers. CanniMed currently has capacity to grow 7,000 kg of cannabis per year. That level should increase to around 20,000 kg annually, though, by 2019. Using the final price for the acquisition, that means Aurora is paying around $55,000 per kg for the additional capacity. 

Ontario is thinking about pricing recreational marijuana at $10 per gram. That translates to $10,000 per kg. Based on Aurora's current cost of sales and Ontario's potential price per gram, it would probably take the company around seven years to recover its initial investment in buying CanniMed. That's not great, but it's not horrible, either. 

One clear loser

There was definitely one clear loser in the deal announced on Wednesday. Newstrike Resources struck out.

Earlier this week, Reuters reported that Aurora was in discussions to buy both CanniMed and Newstrike. CanniMed responded with its own announcement of plans to acquire Newstrike Resources almost immediately after Aurora gave notice of its intention to buy CanniMed.

Aurora wasn't happy at all with the potential Newstrike deal. The company's management called the proposed purchase price that CanniMed was proposing to pay for the smaller marijuana grower "hard to fathom." However, the Reuters report indicated that Aurora might be considering including Newstrike in a three-way merger that could have had ripple impacts throughout the marijuana industry.

That three-way deal is now apparently a no-way deal. As part of the friendly agreement with Aurora, CanniMed has called off its plans to buy Newstrike. The only consolation prize for Newstrike is that it will receive a $9.5 million break fee. That wasn't much consolation to its shareholders, though: Newstrike stock plunged 19% on Wednesday.

Wait and see

Will Aurora Cannabis ultimately win with its buyout of CanniMed? We'll have to wait and see.

Expectations are sky-high for the recreational-marijuana market in Canada. It could be that supply won't be able to keep up with demand. Marijuana growers with larger capacity could be practically minting money if that happens. In this scenario, Aurora's premium price for CanniMed could prove to be a smart investment.

Aurora executive Cam Battley said the company "now look[s] forward to warmly welcoming CanniMed's employees and forging one unified team." After the heated battle between the two organizations, it will be interesting to see how unified the team becomes. As I said, we'll have to wait and see.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.