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Aphria grappled with a hostile takeover offer by an Ohio-based company



This is a tumultuous month for Aphria Inc. On September 20, 2018, filed a photo, the marijuana plant in the process was spread tended to by a worker at Aphria's Leamington facility.

Dax Melmer / Windsor Star

News about possible takeover offers for giant pot Aphria Inc. creating a big spark on the market Friday, but Leamington-based pot giant leaders were skeptical of the steps of the Ohio-based marijuana company, Green Growth Brands, would be a good thing for the company. shareholders.

"While we value the GGB's interest in the value we make in Aphria and our significant growth prospects, their proposals failed to reward our shareholders for participating in such transactions," said Irwin Simon, who was appointed as the new chairman of the Aphria board after Green Growth Brands announced its offer Thursday afternoon.

Simon, a businessman with experience in the packaged food industry, replaced Vic Neufeld as chairman of the board. Neufeld remains the chief executive of Aphria.

Canadian cannabis growers, through their new chairman, indicated Friday that company shareholders must reject hostile takeover efforts.

"The proposed bids are quite risky given the condition of the GGB to complete brokered financing at prices that have more than doubled their average share price recently as a key term for proposals," Simon said.

However, Green Growth Brands said in the next few weeks it intends to make an official offer for Aphria, valuing marijuana producers at C $ 2.8 billion.

The Ohio company said Aphria shareholders will receive 1.5714 Green Growth shares for each of their shares. That was equivalent to a 45.5 percent premium above Aphria's closing price of $ 6.19 on the Toronto Stock Exchange on December 24.

Aphria shareholders will receive a value of $ 11 per share – well above Thursday's closing price of $ 7.57.

The company's shares jumped to $ 8.65 per share at the market opening on Friday morning, finally ending the trading day at $ 8.52 and valuing the company at $ 1.88 billion. Even with that encouragement, the value of Aphria's shares remained less than half on October 17, the day of recreational marijuana became legal in Canada.

The GGB takeover agreement is still subject to a number of requirements if it reaches a vote by the shareholders of the two companies.

"The board has determined that the GGB proposal, as it is now, significantly underestimates the company," Irwin said. "Aphria has a tremendous market opportunity as a leader in this sector and a strategic vision to fulfill those opportunities. Our focus is to realize that value for the benefit of all our shareholders. "

Neufeld remains a council member in Aphria. He did not respond to Friday for the message left by Star.

Neufeld, Aphria's top executive, is also one of five members of Green Acre Capital's "advisory board", a private investment company that invests in cannabis production, research and retail companies – including large investments in Green Growth Brands.

Further busiing potential bids: Aphria also stated Friday that he "has a passive investment" at Green Acre Capital Fund II, "which we understand has invested in many developing marijuana companies including GGB."

Green Growth Brands CEO Peter Horvath said a hostile takeover bid came after an official offer to control Aphria was rejected.

The takeover offer made directly to shareholders – without the approval of the target company's board of directors – is considered a hostile offer. The shareholders of each company are expected to immediately receive information about the offer, if it becomes official.

"We have announced our intention to bid several weeks before actually bidding because from that time we thought the value of our company would be fully known," Horvath said in a television interview Friday with BNN Bloomberg.

"We have decades of experience in doing this type of work (retail and company management) in various formats. Cannabis is just another category that can happen. We think (Aphria) has extraordinary cultivation capacity and it's time to fulfill their supply agreements. "

Other key investors in Green Growth Brands are the Schottenstein family, which has a history of ownership in the fashion retail business, including American Eagle, Victoria's Secret, and others.

Horvath has served as a senior executive for these companies for years and believes that combining the management skills of both entities can prove useful in the marijuana industry.

"We respect their team and assets in Canada," Horvath said. "We think their team is strong and joining our team makes sense.

"We think this is a big opportunity and will give it to shareholders to respond. Decisions will be made by shareholders and that is what will happen. "

Aphria in recent weeks has seen the value of its shares fall after a critical report on several of its acquisitions. Short Sellers Quintessential Capital Management and Hindenburg Research earlier this month questioned the value of recent acquisition-based companies in Colombia, Jamaica and Argentina.

Related

Horvath said that, despite any information about the transaction, Green Growth Brands made its offer solely on the strength of Aphria's operations in Canada.

Aphria announced on Friday that it had formed an independent director committee to consider all the formal offers it received.

Aphria said earlier this month that it had appointed a "special committee" to review the company's recent acquisition of its ownership in Latin America.

dbattagello@postmedia.com

No longer chairman of the board of directors, Vic Neufeld remains the CEO of Aphria Inc. based in Leamington. He was shown on April 11, 2018, submitted a photo of receiving this year's Big Company award at the 28th annual Business Excellence Award presented by the Windsor-Essex Regional Chamber of Commerce and The Windsor Star on St. Clair College Center for the Arts.

And Janisse /

WINwp

Rows of cannabis plants in Leamington's greenhouse facility owned by Aphria Inc. shown in this photo file September 19 2018. The company has attracted the attention of Ohio-based companies to see potentially hostile takeover offers.

Dax Melmer /

Windsor Star


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