Cannabis producer Aphria rejects rival takeover bid, share price falls 7%
The Canadian cannabis producer rejected a $2 billion hostile takeover bid from competitor Green Growth Brands on the grounds that it significantly undervalues the company.
Aphria's board of directors has rejected rival Green Growth Brand’s (GGB) hostile takeover bid because it significantly undervalues the company.
US-based cannabis producer GGB submitted a takeover offer to acquire its Canadian rival Aphria in an all-stock deal on January 23, valuing the company at $2.06 billion.
Following Aphria’s rejection of GGB’s offer its share price tumbled more than 7%.
Green Growth Brand $2 billion bid undervalues Aphria
On Wednesday, Aphria rejected GGB’s offer after its board of directors felt it fundamentally undervalued the company.
‘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,’ Aphria independent board chair Irwin D. Simon said.
‘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,’ he added.
Cannabis stocks suffer losses
Aphria contends that it has strong growth potential and opportunities to ‘create substantial value for its shareholders’, with the company eager to expand into the wider medical-use market in Europe, Latin America and the Caribbean.
‘A hostile takeover by GGB ignores this bright outlook, which is another reason why the Aphria Board strongly urges shareholders to reject the bid,’ Simon added.
On Wednesday, other cannabis producers saw their share prices fall, with Aurora Cannabis, Tilray and Canopy Growth down between 4% and 5% respectively.
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