Green Growth Brands pursues Aphria with second hostile bid

Aphria Inc (NYSE:APHA) said late Tuesday that it is the subject of a second formal all-stock takeover offer by its US rival Green Growth Brands Inc (CSE:GGB) (OTCMKTS:GGBXF), which would value the Canadian cannabis company at roughly C$2.35 billion.

Under the deal’s terms, Green Growth has offered Aphria stakeholders 1.5714 shares of Green Growth stock for each Aphria share, which amounts to a premium of roughly 25% to Aphria’s last price on the final trading day prior to Green Growth’s first bid for Aphria.

READ: Aphria says Green Growth Brands’ takeover bid undervalues cannabis company

The offer is valued at about C$9.40 per Aphria share, when based on Green Growth Brands’ closing price of C$5.98 on the Canadian Stock Exchange on Tuesday.

Last December, Green Growth first put together an unsolicited offer to take over Aphria, which rebuffed the move on the grounds that it “significantly” undervalued the company.

In a statement, Aphria urged shareholders to “take no action” on the current Green Growth offer until its board of directors has made a formal recommendation to shareholders.

Aphria pointed out that the offer’s terms are “substantially” identical to Green Growth’s first unsolicited bid on December 27.

An independent committee of Aphria’s board will weigh the bid by Green Growth before deciding on a recommendation.

“Any offer would necessarily need to be evaluated against the current and future value of our current strategic plan,” Irwin Simon, Aphria’s board chair said in a statement. “We are also determined to protect Aphria shareholders from opportunistic offers that fail to reflect the substantial value and growth prospects we have built at Aphria. We will evaluate GGB’s offer in this spirit.”

Green Growth’s quest to acquire Aphria comes as a number of US companies move to take stakes in Canadian cannabis companies in the wake of the country’s move to make recreational marijuana legal last October. Last month, the tobacco giant said it would pay about $1.8 billion for a 45% stake in the Canadian marijuana producer Cronos Group.

Aphria shares took a hit last year, dropping to below $5 per share, following the publication of a critical report by short-sellers Hindenburg Research and Quintessential Capital Management, which referred to the Canadian cannabis company as a “shell game”.

In response to news of Green Growth’s second hostile bid, Aphria shares slipped 2.97% to US$6.87 before the opening bell on Wednesday. Green Growth Brands shares finished up 6.9% at $4.48 on Tuesday.

Contact Ellen Kelleher at [email protected]

Story by ProactiveInvestors