cannabis-watch-us.-cannabis-company-makes-hostile-bid-for-aphria

Cannabis Watch: U.S. cannabis company makes hostile bid for Aphria

U.S. marijuana producer Green Growth Brands Ltd. said late Thursday it has made a takeover bid for Aphria Inc., one of Canada’s largest cannabis producers by market value.

Aphria

APHA, -4.30%

APHA, +0.13%

 stock soared 26% in after-hours trading Thursday after closing down 4.3% at $5.57 during the regular session. Aphria’s Canada-listed shares were halted after the close.

Green Growth

GGBXF, -6.41%

 — which is legally called Xanthic Biopharma Inc. — said that its offer values Aphria at C$11 a share, or roughly $2.1 billion, which represents a 46% upside to Aphria’s closing price on Dec. 24. Green Growth said that it had offered a “friendly” bid that included a $50 million investment before making its current bid public, and that it plans to complete “brokered financing” of its own stock at C$7 a share on the Canadian Securities Exchange, to raise C$300 million and fund the business.

“Green Growth believes it already has support for the offer from Aphria shareholders holding approximately 10% of the outstanding Aphria shares,” according to Thursday’s announcement. “Green Growth has additionally acquired a meaningful toehold position in Aphria.”

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Green Growth trades on the Canadian Securities Exchange as well as over the counter in the U.S. The company bills itself as a vertically integrated marijuana company with operations in several states. According to the company’s financial statements, it banked losses of $516,344 on sales of $1.7 million during the September quarter. It did not earn revenue in the prior quarter, and lost less than $100,000.

See also: Aphria’s stock rebounds after second short-seller report

Aphria stock has declined more than 30% after short seller Hindenberg Research published a note about the company’s business, calling it a “shell game,” among other things. At the time Aphria called the note a “malicious and self-serving attempt to profit by manipulating” the stock price. Since, Aphria has announced that it has a named a special committee to review the claims.

An Aphria spokeswoman said the company did not have an immediate comment. Green Growth did not immediately provide comment beyond its announcement.