Emblem Cannabis wins Ayurcann assets as Auxly bid falls short

Two Canadian licensed producers have been circling the same distressed asset, but only one walked away with it.

Ayurcann, undergoing insolvency proceedings in Ontario, have completed a court-supervised sale process that drew competing bids from Red White & Bloom Brands Inc.'s subsidiary Emblem Cannabis Corporation and Auxly Cannabis Group. Emblem has been selected as the winning bidder. Auxly, which had entered the process as the stalking horse, confirmed it was not chosen.

Auxly had submitted its stalking horse bid alongside debtor-in-possession financing of up to $2.0 million, a non-revolving facility bearing 12% annual interest with a 2% upfront commitment fee, secured by a court-ordered super-priority charge over all of Ayurcann's property. Under the sale process rules, Auxly's bid has been designated the backup bid: should the Emblem transaction not close by May 15, 2026, Auxly would become the winning bidder at its original stalking horse amount. The DIP facility, along with the break fee and expense reimbursement contemplated in the stalking horse agreement, will be repaid to Auxly as part of the closing.

"Our stalking horse bid for Ayurcann was opportunistic in nature and contingent on exceeding our internal return thresholds," said Hugo Alves, CEO of Auxly. "Our team will continue to pursue non-organic growth opportunities with vigilance where there is a strong strategic fit and, in the meantime, we can continue to focus on growing our business organically."

For Emblem, the deal is structured as a share purchase giving it indirect control over Ayurcann's underlying businesses, licences, and operations through ownership of 100% of newly issued shares. The acquisition brings three consumer brands — Fuego, Xplor, and Happy & Stoned, along with their trademarks and intellectual property, covering more than 90 product lines available in approximately 2,500 retail locations across Canada. The brands are concentrated in the vape and pre-roll segments. Emblem also takes on Ayurcann's cannabis formulation, manufacturing, and packaging facility in Pickering, Ontario, along with equipment, inventory, supplier relationships, and distribution agreements spanning eight provinces and territories. Regulatory approval will be required for the transfer of government-issued licences.

RWB says the transaction is expected to generate cost savings across the combined business through reduced production costs, supply chain efficiencies, and lower overhead.

"This acquisition is highly strategic and will immediately scale our Canadian platform with a leading portfolio in the fastest-growing product categories and a national distribution footprint across more than 2,500 retail locations," said Colby De Zen, president of RWB. "Beyond the brands and infrastructure, we are acquiring a proven operating platform with meaningful synergies across supply chain, manufacturing, and overhead."

The transaction remains subject to court approval and customary closing conditions.