Aphria Inc (TSE: APHA)(NYSE: APHA), a major Canadian cannabis company whose reputation has been tarnished by investigate reports from short sellers, has rejected a hostile takeover bid from Green Growth Brands Inc (CSE: GGB). In an official press release, Aphria said that the offer drastically undervalued the Canadian cannabis grower and it’s future growth potential.
The takeover offer made last month represents a 23 percent discount on Aphria’s share price based on a 20-day volume-weight average price of GGB stock. Since then, however, Aphria shares have gained around 75 percent since the offer was made. According to the Board of Directors viewpoint, the hostile bid “significantly undervalues Aphria relative to its current and future worth” and “would have negative repercussions, including delisting from the TSX and NYSE and a potential reduction in interest from strategic partners.”
“The Aphria Board of Directors unanimously believes that GGB’s hostile offer is significantly undervalued and inadequate and not in the interest of Aphria shareholders on multiple grounds,” said Irwin D. Simon, Aphria’s independent Board Chair according to an official statement. “Regardless of their brazen attempts to suggest otherwise, GGB is asking Aphria shareholders to accept a substantial discount on their shares, as well as delisting from both the TSX and NYSE, resulting in a vast dilution of their ownership in Aphria. In return GGB offers shares in an illiquid company with limited operating history, minimal assets and no track record in the cannabis industry. GGB clearly timed their offer to exploit recent lows for Aphria and cannabis stocks overall, with the goal of transferring value to the insiders who control GGB at the expense of Aphria shareholders.”
The company also made a new website, Aphriafuture.ca, specifically to address investor concerns and encourage them to reject the hostile bid. On the website, Aphria also lists many quotes from analysts at Scotia Capital, CIBC, and other outlets voicing skepticism over the practicality of the GGB takeover offer. Among the most cited reasons for skepticism comes from the fact that GGB is smaller than Aphria, and the proposed all-stock transaction would require GGB’s stock to reach $7 per share, which it has never done before.
The original authors of the report investigation Aphria, Hindenburg Research, voiced similar concerns over the GGB takeover offer back in late December. The company went on to call the GGB offer largely worthless, and an attempt to give the appearance of demand in hopes of “spurring credible offers.”
In response to the news, shares of Aphria plunged 9 percent today on both the TSE and NYSE. The past week has seen share prices jump from $7.2 to $10.84 on Monday – a 51 percent increase.
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