Aphria Inc (NYSE: APHA)(TSE: APHA) has become the black sheep of the cannabis industry, with many looking to it as an example of the possible fraud and malpractices occurring in the young marijuana market as well as why mainstream investors remain distant about the sector in general. In light of last year’s accusations regarding insider-orchestrated LATAM transactions and the resignation of the company’s CEO earlier this year, the now tarnished company has received a formal takeover offer from Green Growth Brands (CNSX: GGB).
“We are pleased to officially launch our bid for Aphria. This is an exciting opportunity for shareholders of both Green Growth and Aphria to build value and create the preeminent cannabis operator in North America,” said GGB CEO Peter Horvath. “The combination of Aphria’s Canadian supply and wholesale agreements with Green Growth’s vertically integrated operations and rapidly growing retail footprint in the United States best positions us to capitalize on the massive growth opportunities in North America and beyond. I encourage Aphria shareholders to tender their share to our offer.”
While GGB remains a smaller company than Aphria, needing its share price to hit certain levels before their proposed valuations can enter effect, many have expressed curiosity over the takeover offer, which will take place through a C$2.8 billion all-stock transaction. Aphria executives have insisted that the offer greatly undervalues the company’s future potential.
At the same time, Quintessential Capital Management and Hindenburg Research – the short sellers and authors of the investigative report authored in December – regard the arrangement as a “highly irregular deal” that is “non-credible and likely an attempt to generate the appearance of demand in the hopes of spurring credible offers.” However, with GGB offering a C$150 million equity investment as an initial commitment, such a perspective seems less likely to be correct.
While the formal offer was slated to commence on January 23rd, 2019, Canadian regulators chose to suspend trading on both Aphria and GGB late Tuesday, citing the pending news as their reason. Prior to the trading suspension, however, Aphria shares increased around 6 percent.
Green Growth Brands Company Profile
Green Growth brands expects to dominate the cannabis and CBD market with a portfolio of emotion-driven brands that people love. Led by renowned retailer Peter Horvath, the GGB team is full of retail renegades with decades of experience building successful brands. –Green Growth Brands
Aphria Inc Company Profile
Aphria is a leading global cannabis company driven by an unrelenting commitment to our people, product quality and innovation. Headquartered in Leamington, Ontario – the greenhouse capital of Canada – Aphria has been setting the standard for the low-cost production of safe, clean and pure pharmaceutical-grade cannabis at scale, grown in the most natural conditions possible. Focusing on untapped opportunities and backed by the latest technologies, Aphria is committed to bringing breakthrough innovation to the global cannabis market. The Company’s portfolio of brands is grounded in expertly-researched consumer insights designed to meet the needs of every consumer segment. Rooted in our founders’ multi-generational expertise in commercial agriculture, Aphria drives sustainable long-term shareholder value through a diversified approach to innovation, strategic partnerships and global expansion, with a presence in more than 10 countries across 5 continents. –Aphria