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US Firm Green Growth In Hostile Bid For Canadian Cannabis Firm Aphria

US Firm Green Growth In Hostile Bid For Canadian Cannabis Firm Aphria
A hostile bid worth for the major Canadian cannabis producer Aphria Inc. would be made by the American cannabis retail company Green Growth Brands. In the past one month, the stocks of the Canadian company had dropped significantly following questions being raised about some of the acquisitions that have been made by the company in the past.
The Columbus, Ohio-based GGB announced that an all-stock deal with a value of $11 per share would be offered to Aphria shareholders which would be 45 per cent more than the closing price of the stocks of the Canadian company as on Thursday closing.
Peter Horvath, the CEO of Green Growth said that the company had earlier made a friendly bid for business merger to Aphria which was rejected following which this hostile acquisition bid was decided upon.
“In the last 10 days, we have worked through an intermediary to communicate to their board our interest. Throughout that process, we made it clear we were making a friendly bid,” Horvath told the media.
“We offered them a short exclusivity period, but they rejected that. So we knew we needed to move quickly, we didn’t want to be used.”
In early December, the real worth of the of the acquisition of the three Latin American companies in Colombia, Jamaica and Argentina by Aphria was questions in a joint report from short sellers Quintessential Capital Management and Hindenburg Research following which the company has come under intense investor scrutiny.
If GGB is able to acquire Aphira, a “pretty hard look at those assets” would be taken by Horvath about the value of the acquisitions by the Canadian company and would probably “change the portfolio”, said the CEO of GGB when questioned about the acquisitions.
“It’s not unlike what private equity does. We look at these assets, and mark some down,” Horvath said.
Revenues of about $54 million from its two retail cannabis outlets in Nevada and a grow space it operates have been generated by Green Growth in the last 12 months. seven additional retail licences in Nevada was recently obtained by the company.
The aim of Green Growth is to raise $300 million for the deal at a valuation of $7 per share for the Canadian company which is quite a large premium to the closing price of the stock on Thursday of $4.98. This valuation of the stocks of Aphira by Green Growth could be questions because as recently as December 18, the shares of the Canadian company dropped as low as $3.50 a share.
“We are very confident it’s a fair valuation. With our nine stores in total in Nevada, that market alone is going to get us $150 to $200 million of revenue. So to me, a $7 stock value is likely,” Horvath said.
However he said that it would not be before weeks that his company would put forward any actual offer.

Christopher J. Mitchell

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