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Wednesday, Jun 29, 2022
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.


Green Growth’s Takeover Bid for Aphria Has Officially Expired

The drama between Green Growth Brands Ltd (CSE:GGB) and Aphria Inc (NYSE:APHA)(TSX:APHA) has dragged on for far too long.

takeover bid colorful word on the wooden background

The drama between Green Growth Brands Ltd (CSE:GGB) and Aphria Inc (NYSE:APHA)(TSX:APHA) has dragged on for far too long. It was back in December when we first learned of Green Growth’s attempt to purchase Aphria back when it was trading below $8 a share. The stock has risen since then and even reached more than $14, well above Green Growth’s purchase price of $11. However, a disappointing quarterly result has since seen the share price fall to a little over $10 as of the end of last week.

Whether shareholders would have been better off taking the deal or not is moot now. The good news is that the drama is finally over.

The price tag wasn’t even the biggest controversy. There were a lot of questions as to what overlap there was between the two companies, with a short-seller even calling the deal a ‘fakeover.’ One thing that stood out was that GA Opportunities Corp, which was the second largest shareholder of Green Growth, was backed by Aphria.

There’s been no shortage of negative press circulating around Aphria and so it might be no surprise that CEO Vic Neufeld announced he was leaving The Company, citing health reasons as one of the big factors in his decision.

A few weeks ago, Aphria announced that it would “terminate the arrangements with GA Opportunities Corp. for consideration of $89.0 million.” It made the announcement in conjunction with news that the takeover bid’s expiration would be accelerated to April 25. And last week, the day came and went, and so did the Green Growth bid.

We are pleased to have this resolved in a favourable manner. We continue to move forward, creating long-term shareholder value by leveraging our production expansion, industrial scale cultivation and automation, brand positioning and our strategic global expansion initiatives that, as mentioned before, will be additionally supported by the $89.0 million in proceeds from the transaction

– Irwin D. Simon, Chairman and Interim CEO of Aphria

Could we see other bids take place?

One of the big obstacles to this deal ever being likely was that Green Growth is a U.S. company, and for Aphria to take the deal, it would have to move exchanges. Being on both the NYSE and TSX gives it access to some big investors, and moving to the Canadian Securities Exchange would be a big blow. Having the stock on a major exchange lends a lot of credibility and is a good way to attract investors.

It’s for that same reason that we likely won’t see a U.S. cannabis company try to bid for Aphria, unless it’s with a big caveat like what we saw between Canopy Growth Corp (NYSE:CGC)(TSX:WEED) and Acreage Holdings Inc. (CSE:ACRG.U). It’s more likely that we’ll see a beverage company link up with Aphria or a company from another industry.  We’ve seen big tobacco get involved and most recently we’ve even seen a consumer goods company step into the cannabis market as well.

There are many possibilities still out there for a potential bid and many marijuana companies still looking for suitors. While Aphria was in talks in the past with other companies, we haven’t seen anything materialize just yet.

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