Aphria Inc. (NYSE: APHA and TSX: APHA) turned down the acquisition proposal by Xanthic Biopharma d.b.a. Green Growth Brands (CSE: GGB) on Friday morning. The Aphria Board determined that GGB’s current proposal significantly undervalues the company.
On Thursday evening, GGB had announced its intention to take over Aphria in an all-stock transaction. After rising about 20% on Thursday after-market hours, Aphria stock opened up about 13% on Friday.
The proposed offer valued Aphria at approximately C$2.8 billion (US$2.1 billion) based on a valuation of C$7.00 per share for Green Growth Shares. Under the terms of the offer, Aphria shareholders would receive 1.5714 common shares of GGB for each Aphria share. Peter Horvath, CEO of Green Growth stated that combined company will be able to accelerate growth strategies in Canada, US and overseas.
Responding to the proposed offer, Irwin Simon, Chairman of Aphria Board of Directors said, “While we appreciate GGB’s interest in the value we have created at Aphria and our significant growth prospects, their proposal falls short of rewarding our shareholders for participating in such a transaction.”
The Board also felt that the proposed offer is quite risky given GGB’s condition to complete a brokered financing at a price that is more than double the recent average of their share price.
However, the Aphria Board of Directors has established an independent committee of directors to consider GGB’s buyout proposal and any formal offer received. GGB is expected to increase the takeover bid.
Earlier this month, Aphria shares got hammered following a report from Hindenburg Research, which stated that Aphria’s LATAM acquisition is worthless and accused that a network of insiders of Aphria diverted funds from shareholders and put them into their own pockets.
Aphria responded to the allegations by saying that the short-seller report is a malicious and self-serving attempt to profit by manipulating Aphria’s stock price at the expense of Aphria’s shareholders.
Shares of Aphria had dropped about 60% both in last three months and one year period.
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