Aphria's Board of Directors Rejects Green Growth Brand's Hostile Takeover Bid

Published: February 6, 2019

Aphria's Board of Directors Rejects Green Growth Brand's Hostile Takeover Bid

Aphria Inc. announced that its Board of Directors has rejected the hostile bid by Green Growth Brands Inc. to acquire all of the outstanding common shares of the Company including any Common Shares that may become issued and outstanding after January 22, 2019, but prior to the expiry of the hostile bid upon the exercise, conversion or exchange of options, warrants, debentures or other securities of the Company exercisable or convertible into Common Shares, other than Common Shares owned by GGB or its affiliates, in exchange for 1.5714 shares of GGB.

Based on the 20-day volume-weighted average price of GGB shares immediately before GGB’s announcement of an intention to acquire the Common Shares of the Company, the Hostile Bid reflects a 23% discount to the Company’s share price over the same period. The Board made its recommendation after careful consideration and receipt of the recommendation of a committee of its independent directors, who were advised by financial and legal advisors.

“The Aphria Board of Directors unanimously believes that GGB’s hostile offer is significantly undervalued and inadequate and not in the interest of Aphria shareholders on multiple grounds,” said Irwin D. Simon, Aphria’s independent Board Chair. “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. In return GGB offers shares in an illiquid company with limited operating history, minimal assets and no track record in the cannabis industry. GGB clearly timed their offer to exploit recent lows for Aphria and cannabis stocks overall, with the goal of transferring value to the insiders who control GGB at the expense of Aphria shareholders.”

In the Board’s view, the Hostile 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.

Simon continued, “Today, Aphria is in a better position than ever to create long-term value for our shareholders, following a positive second quarter and continued progress expanding our production capacity and global footprint. Over the past five years, we have built a strong foundation for a leading global cannabis company in cultivation, manufacturing, research and distribution infrastructure, as well as forging strategic investments and alliances to efficiently scale around the world.

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