Ohio cannabis firm Green Growth continues hostile bid after Aphria rejection

mjbizdaily.com
Date:
Friday, Feb 8, 2019

Aphria’s board on Wednesday rejected the hostile bid.

Aphria said Green Growth’s offer of 9.22 Canadian dollars ($6.95) per Aphria share “is significantly undervalued and inadequate and not in the interest of Aphria shareholders on multiple grounds.”

The offer provides Aphria shareholders with 1.5714 Green Growth common shares for each Aphria share.

“Regardless of their brazen attempts to suggest otherwise, GGB is asking Aphria shareholders to accept a substantial discount on their shares, as well as delisting from both the TSX and NYSE, resulting in a vast dilution of their ownership in Aphria,” Irwin D. Simon, Aphria’s independent board chair, said in the statement.

Aphria’s board recommended that Aphria shareholders reject the hostile bid and “take no action.”

The Canadian company’s board concluded that the bid:

“Significantly undervalues Aphria relative to its current and future worth, offering Aphria shareholders a substantial discount to its current and future value as opposed to a premium observed in other transactions in the cannabis sector involving Canadian licensed producers. “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, with minimal offsetting operational, financial or strategic benefits. “Would result in Aphria shareholders effectively giving GGB shareholders a 36% interest in Aphria in exchange for shares in a company with limited operations or other experience in the cannabis industry. “Does not account for Aphria’s bright outlook, either as an independent company or in partnership with a strategic partner, which offers Aphria shareholders substantial value creation.”

Aphria said Green Growth “offers shares in an illiquid company with limited operating history, minimal assets and no track record in the cannabis industry.”

The Canadian company, which operates in numerous federally regulated markets around the world, said a combination with Green Growth could “destroy” value for Aphria shareholders, since Green Growth’s U.S. cannabis activities are illegal in the eyes of American federal law.

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