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article imageGreen Growth Brands goes public with Aphria takeover offer

By Karen Graham     Jan 23, 2019 in Business
Leamington - Green Growth Brands (GGB), 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 filed its Offer to Purchase and Circular and related documents with the applicable securities regulatory authorities in Canada and the United States on Tuesday and will formally commence its offer to acquire all of the issued and outstanding common shares of Aphria Inc. on Wednesday, January 23, 2019.
"We are pleased to officially launch our bid for Aphria," Green Growth Brands CEO Peter Horvath said. "This is an exciting opportunity for shareholders of both Green Growth and Aphria to build value and create the preeminent cannabis operator in North America."
Back on December 27, 2018, Green Growth Brands made an unsolicited proposal to take over Leamington-based Aphria. Aphria rejected the planned C$2.8 billion ($2.1 billion) hostile offer, saying the bid significantly undervalued the company. GGB says it's offer values Aphria at $11 per share or $2.8 billion at the time of the announcement and would be an all-stock transaction.
Several weeks later, Green Growth has now legitimized its offer, coming forward with the details that were missing from the earlier, spur-of-the-moment offer. Aphria shareholders would receive 1.5714 common shares of Green Growth for each Aphria Share, including Aphria Shares that may become issued and outstanding prior to 5:00 p.m. (Toronto time) on May 9, 2019, This would value the marijuana producer at $2.06 billion.
Peter Horvath is the CEO of Green Growth Brands.
Peter Horvath is the CEO of Green Growth Brands.
Green Growth Brands
Green Growth is currently valued at $6 per share. Aphria, meanwhile, was down 1.4 percent early Wednesday when Aphria urged its shareholders to take no action on Green Growth Brands hostile-takeover bid. Aphria was down 42 percent since going public, trading near $7.04 early Wednesday, according to the Business Insider.
Aphria said Green Growth's proposal undervalued the company, reflecting a 23 percent discount to its average share price over the same period, the same thing the company said in December about the original offer. Aphria wants its stockholders to know that GGB's offer is based on "a hypothetical valuation of its own shares, with no relation to the current price."
Low ball bid
Investor John Mastromattei, who acquired a six-figure stake in Aphria after its stock sank in December, says he believes the GGB stock offer won't appeal to most shareholders.
"It's a low-ball offer," he said in an interview Wednesday, noting that Green Growth Brands is attempting to take over a company worth far more than it is while spending very little in cash. "They're trying to capitalize on the cheap share price by tricking investors into thinking this is the only option they have," he said. "The Green Growth shareholders get to own Aphria at a real bargain price."
More about green growth brands, aphria, takeover bid, all shares, Business
 
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