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Jan. 26, 2019, 10:33 a.m. EST

Green Growth makes hostile bid for Aphria official

Nearly four weeks after making intentions known, Green Growth claims to value Aphria at C$2.8 billion in all-stock offer

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By Max A. Cherney


Aphria
Aphria grows and distributes cannabis.

U.S.-based cannabis producer Green Growth Brands Inc. made a formal offer to Aphria Inc. shareholders to acquire the company Tuesday, nearly four weeks after the Ohio company originally announced plans for the bid.

Green Growth /zigman2/quotes/204912440/delayed GGBXF -7.41%  offered Aphria /zigman2/quotes/207425803/composite APHA +0.43%   /zigman2/quotes/205566616/delayed CA:APHA +0.33%  shareholders 1.5714 shares of Green Growth stock for each outstanding Aphria share. The all-stock deal would value Aphria at roughly C$2.8 billion, according to Green Growth’s math, which values its own shares higher than the market does.

Green Growth previously said it would raise C$300 million through a stock sale at the C$7-a-share valuation that it claims in the bid. Green Growth said Tuesday it has received a commitment from an investor for C$150 million of that investment.

The bid for the company opens Wednesday, and will remain open until May 9, Green Growth said. Green Growth said it owns 3 million shares of Aphria already, about 1.2% of Aphria’s outstanding shares.

Previously: The ‘hostile’ takeover offer for Aphria is littered with red flags

When Green Growth first announced its intentions to purchase the Leamington, Ontario-based company on Dec. 27, Aphria said that the bid “significantly undervalues” the business, and noted that the company had not received a formal offer. Aphria did not respond to requests for comment on the bid Tuesday afternoon, but in a blog post late Tuesday the company advised shareholders to take no action with respect to the takeover bid.

Green Growth — which is backed by the Schottensteins, an Ohio family that has built their fortune in the retail business — declined to comment further or make executives available for an interview.

Regulators in Canada halted both stocks at roughly 4 p.m. Eastern time, but Aphria’s U.S.-listed shares continued to trade. Aphria’s U.S.-listed shares rose after the halt, but calmed back down in after-hours trading after the news became known. Green Growth stock rose 6.9% in the regular session.

If Green Growth’s bid to buy Aphria were successful, it would mean significant changes for existing Aphria shareholders. The Toronto Stock Exchange, or TSX, and the New York Stock Exchange — the two exchanges that list Aphria shares — do not allow companies that violate federal regulations to list stock. Because Green Growth operates illegally under U.S. federal law, it’s likely that the stock would only trade on the Canadian Securities Exchange — as Green Growth does now — and over the counter in the U.S.

A guide to pot stocks: What you need to know to invest in cannabis companies

Aphria stock plummeted last year after short sellers Quintessential Capital Management and Hindenburg Reseach released a report that described Aphria as a “shell game” and accused top executives of enriching themselves at the expense of shareholders. CEO Vic Neufeld and co-founder Cole Cacciavillani announced they would leave the company earlier this month, while continuing to deny the accusations.

Weed stocks were mixed Tuesday. Canopy Growth Corp. /zigman2/quotes/202205609/delayed CA:WEED -0.05%   /zigman2/quotes/200603886/composite CGC -0.24%  rose 1.4%, Aurora Cannabis Inc. /zigman2/quotes/210559470/composite ACB -5.22%   /zigman2/quotes/203734337/delayed CA:ACB -4.86%  fell 1.4% and Tilray Inc. /zigman2/quotes/209129655/composite TLRY -1.66%  dropped 5.7%. The ETFMG Alternative Harvest ETF /zigman2/quotes/204332491/composite MJ -0.97%  fell 0.3% during the regular session Tuesday.

/zigman2/quotes/204912440/delayed
US : U.S.: OTC
$ 0.03
-0.0020 -7.41%
Volume: 135,922
Sept. 18, 2020 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$4.52 million
Rev. per Employee
N/A
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/zigman2/quotes/207425803/composite
US : U.S.: Nasdaq
$ 4.68
+0.02 +0.43%
Volume: 1.89M
Sept. 18, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.34 billion
Rev. per Employee
$147,410
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/zigman2/quotes/205566616/delayed
CA : Canada: Toronto
$ 6.14
+0.02 +0.33%
Volume: 915,208
Sept. 18, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.77 billion
Rev. per Employee
$190,843
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/zigman2/quotes/202205609/delayed
CA : Canada: Toronto
$ 21.57
-0.01 -0.05%
Volume: 1.72M
Sept. 18, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$8.01 billion
Rev. per Employee
$150,142
loading...
/zigman2/quotes/200603886/composite
US : U.S.: NYSE
$ 16.36
-0.04 -0.24%
Volume: 2.11M
Sept. 18, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$6.08 billion
Rev. per Employee
$115,039
loading...
/zigman2/quotes/210559470/composite
US : U.S.: NYSE
$ 6.53
-0.36 -5.22%
Volume: 6.95M
Sept. 18, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$738.20 million
Rev. per Employee
$94,401
loading...
/zigman2/quotes/203734337/delayed
CA : Canada: Toronto
$ 8.62
-0.44 -4.86%
Volume: 3.05M
Sept. 18, 2020 4:27p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$973.10 million
Rev. per Employee
$123,163
loading...
/zigman2/quotes/209129655/composite
US : U.S.: Nasdaq
$ 5.34
-0.09 -1.66%
Volume: 5.20M
Sept. 18, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$679.13 million
Rev. per Employee
$62,689
loading...
/zigman2/quotes/204332491/composite
US : U.S.: NYSE Arca
$ 11.18
-0.11 -0.97%
Volume: 671,937
Sept. 18, 2020 4:00p
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Max A. Cherney is a MarketWatch technology reporter based in San Francisco. Follow him on Twitter @chernandburn.

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