Columbus, Ohio-based Green Growth’s offer – made last month – represented a 23 percent discount on Aphria’s share price, based on the 20-day volume-weighted average price of Green Growth stock immediately before Green Growth’s announcement of its intention to takeover Aphria.
Aphria on Wednesday said its Canadian shares had gained 75 percent since Green Growth announced its intention to take over the company in late December 2018. “Regardless of their brazen attempts to suggest otherwise, GGB is asking Aphria shareholders to accept a substantial discount on their shares,” Aphria Chairman Irwin Simon said in the statement.
“GGB offers shares in an illiquid company with limited operating history, minimal assets and no track record in the cannabis industry,” he added. Simon also added there was no guarantee that GGB would be able to fund the capital requirements needed for a combined company.
Aphria also noted that the bid would have negative repercussions, including delisting from the TSX and NYSE and a potential reduction in interest from strategic partners, that could destroy value for Aphria shareholders.
“It’s no surprise they’re rejecting the offer – it’s all paper and it’s at a bit of a discount to the existing price,” said John Zechner, chairman and founder of J. Zechner Associates, in an interview with BNN Bloomberg Wednesday.
Aphria had until Thursday to respond to the GGB offer, according to a GGB spokesman. The unsolicited offer is due to expire on May 6. After the offer was submitted, Aphria recommended that its shareholders hold off taking action until an independent committee of the directors made a recommendation to the full board.
Based on Tuesday’s closing prices, the GGB asking price is worth $2.3 billion – well below Aphria’s current market value of $3,31 billion. According to Bloomberg, the gap between GGB’s offer and Aphria’s current valuation is the second-widest of the 101 current deals being tracked.
