The company rejects the bid, saying it’s undervalued
Green Growth Brands (GGB) announced last year that it would put forth a hostile takeover bid for cannabis company Aphria. It then formalized the position late last month, offering a deal reportedly worth $2.1 billion. Aphria has now stepped forward and rejected the bid, saying that it is too low for what the company is actually worth. While it could be praised for sticking to its guns, the announcement has had at least a short-term negative effect on the company’s stock price.
After making its announcement yesterday, Aphria’s price dropped 6.72% on the NYSE, trading at $9.99. As of 9:40 EST this morning, it had fallen to $9.20 before making a comeback. It now sits at $9.64 as of this writing.
Aphria asserts that the hostile takeover bid represents a 23% discount to the company’s share price, based on the 20-day volume-weighted average price of Green Growth’s stock. The company’s chairman, Irwin Simon, added, “Regardless of their brazen attempts to suggest otherwise, GGB is asking Aphria shareholders to accept a substantial discount on their shares.”
GGB’s stock has dropped, as well. The company, which is traded on the over-the-counter markets, was at $4.15 at 10 EST this morning, having fallen steadily over the past two days. Yesterday, it traded as high as just $4.28.
GGB isn’t giving up yet, though. In response to the rejection, the company reaffirmed its belief that the move would benefit shareholders from both companies and said in a statement last night, “The combined entity of Aphria and GGB would create an unparalleled North American player with both Canadian and U.S. operations.”
Under the terms of the deal, Aphria investors can tender their shares until May 9. If the expected level of sales isn’t reached, the deal won’t proceed.