- Aphria received an all-stock takeover offer from Green Growth Brands, a US-based marijuana company.
- Green Growth provides Aphria shareholders with 1.5714 common shares of Green Growth for each Aphria share, valuing the marijuana producer at $US2.06 billion.
- Aphria on Wednesday urged its shareholders to take no action until its Board has made a formal recommendation to shareholders, saying the proposal undervalued the company.
- Watch Aphria trade live.
The Canadian cannabis-producer Aphria was down 1.4% early Wednesday after the company urged its shareholders to take no action on Green Growth Brands’ hostile-takeover bid.
Green Growth, a US-based marijuana company, on Tuesday announced that it filed an offer to acquire all Aphria outstanding common shares through an all-stock deal. Green Growth, which first announced its intention on December 27 would give Aphria shareholders 1.5714 common shares of its stock for each Aphria share. At the time, Green Growth said it valued the marijuana producer at 2.8 billion Canadian dollars ($US2.06 billion).
Aphria on Wednesday confirmed that Green Growth commenced its offer and advised its shareholders to take no action until its board has made a formal recommendation to shareholders. Aphria said Green Growth’s proposal undervalued the company, reflecting a 23% discount to its average share price over the same period.
“Aphria is a market leader and has a tremendous opportunity to create substantial value for shareholders,” Irwin Simon, Aphria’s independent board chair said in a statement.
“Any offer would necessarily need to be evaluated against the current and future value of our current strategic plan. 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.”
Aphria listed on the New York Stock Exchange in November, transferring from Canadian markets. Shares exploded by as much as 155% in August and September as tobacco giants such as Imperial Brands and beverage companies such as Constellation Brands triggered a “green rush” by entering the cannabis space.
The stock crashed earlier last month after short-seller Quintessential Capital Management’s Hindenburg Research alleged the company was a “shell game with a cannabis business on the side.” The firm accused Aphria of announcing acquisitions in July that were “largely worthless,” and said they were used to divert as much as $US700 million, or nearly half of its total net assets. Aphria denied the allegations.
Aphria was down 42% since going public, trading near $US7.04 early Wednesday.
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