Last December was a difficult time for one of Canada’s largest cannabis companies. Aphria Inc fell victim to a series of short seller investigative reports which cast doubt on the companies various LATAM acquisitions, alleging that corporate insiders had funneled shareholder funds through worthless acquisitions.
While the report was extremely damaging at the time and a number of key executives resigned (although officially for different reasons), the company has since recovered from its tarnished image. Green Growth Brands (TSE: GGB) announced earlier in 2019 that they were planning a takeover attempt of Aphria at the height of its scandal.
While they hoped that Aphria would be open to a deal, especially considering how far it’s stock price fell, it has instead recovered to a point where this is no longer possible. Today Green Growth Brands announced they were essentially giving up on their takeover attempt.
Officially, the company’s press release went on to say they came to an agreement with Aphria to shorten the expiration date for their takeover offer, from May 9th to April 25th. Green Growth Brands would also be selling its stake in Aphria.
“We are bringing our offer to an end on good terms with Aphria and are excited to turn our focus to our CBD personal care and retail cannabis businesses. We are actively continuing to review other partnerships and M&A opportunities to accelerate the build out of our company,” said GGB CEO Peter Horvath.
For many industry experts, the idea that Green Growth Brands could take one of Canada’s largest cannabis growers was a stretch, especially since GGB is smaller then it’s acquisition target. GGB also needed to have a stock price of over C$7 per share for the proposed valuation to be feasible. At its height, shares of the company reached as high as C$6.2 per share mid-January, before slowly declining over the course of a couple of months. Today the company’s stock price sits at C$3.74 per share.
Aphria also announced on its own it’s Q3 fiscal year results, generating $18 million in revenue for the quarter alongside $73.6 million in net revenue for the year. This represents a 617 percent increase in comparison to the same time last year. Aphria currently has a 115,000 kilogram production capacity, a significant amount that puts it in the top bracket of international producers, but well below giants such as Canopy Growth Corp and Aurora Cannabis , who have cultivation capacities in the 500,000-700,000 kilogram/year range.
“I am proud of the efforts of our over 1,000 employees worldwide as we continue to position Aphria for future growth and success in the global medical and adult-use cannabis industry,” said Aphria’s interim CEO Irwin D. Simon. “Our organization has experienced significant change in a very short period of time which was necessary to propel the Company forward.”
However, like most cannabis companies, Aphria reporting a whopping $108.2 million in Q3 losses, a decline which saw the stock plummet over 12 percent so far. In comparison, GGB fell around 3 percent in today’s trading session.
Aphria Inc Company Profile
Aphria Inc and its subsidiaries produce and sell medical marijuana. Its products include Capsules, Oral solutions, and Vaporizers. The company’s operations are based in Leamington, Ontario. It is focused on producing and selling medical marijuana and its derivatives through retail sales and wholesale channels. – Warrior Trading News