Connect with us

Hi, what are you looking for?

Wednesday, Sep 28, 2022
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.

M&A

U.S. Cannabis Company Looks to Takeover Aphria Inc (TSX:APHA)

Green Growth Brands Ltd (CNSX:GGB) announced that it was intending to purchase Canadian pot producer Aphria Inc (TSX:APHA)(NYSE:APHA) in a takeover attempt.

On Thursday, Green Growth Brands Ltd (CNSX:GGB) announced that it was intending to purchase Canadian pot producer Aphria Inc (TSX:APHA)(NYSE:APHA) in a takeover attempt. The proposed deal would be an all-share transaction where Aphria investors would receive 1.5714 shares of Green Growth. Based on recent share prices, the deal is valued at around $11 per share. This is a 45% premium from the $7.57 that Aphria was trading at as of Thursday’s close.

CEO Peter Horvath of Green Growth believes the two companies will complement each other well, stating in the release that, “Together, we can unleash synergies between our teams, assets and geographies, forming a combined enterprise that will accelerate our collective growth strategies in Canada, the U. S. and overseas.”

It’s clear that Green Growth has some big ambitions for the acquisition that go beyond just North America. And with Aphria having positions in many countries, including recent expansion in South America, it likely caught the attention of the U.S. firm.

Green Growth did attempt to make a friendly deal with Aphria prior to this announcement where the company’s management would have remained intact and it would have had representation at the board of the new combined company. Alas, a deal was not reached and Green Growth became more aggressive in its pursuit of Aphria.

U.S. cannabis market is changing

News of the deal comes on the heels of the Farm Bill that was passed earlier this month which now permits cannabidiol (CBD) that is derived from hemp. It’s a major step for cannabis companies and will likely result in many more CBD products hitting store shelves.

With a form of CBD now being legal in the U.S., there’s an opportunity for U.S. and Canadian companies to work together. However, individual states can still decide to ban CBD.

This is the first big move that’s happened since the news, and it could be just the start. Companies have been hesitant to invest due to legal concerns, but attitudes may be changing now.

Aphria previously held investments in U.S. cannabis companies but ended up having to divest those holdings as the TSX put companies on notice for not being in compliance with U.S. laws and the exchange’s listing requirements.

Aphria stock struggling as of late

One reason Aphria investors might not be overly excited about this deal is that their stock has been crashing badly over the past several weeks. In three months, Aphria’s share price has dropped by 60% and it was at over $20 per share just before recreational pot sales became legal in Canada back in October. So for Aphria investors to be excited at an offer equivalent to $11 per share might be a stretch.

After all, with the company locking up a big investor recently and the recreational market now underway, the stock might be due for a big recovery in 2019. Although the offer is a big premium from its current price, it may not be an easy sell to convince investors that it is a good deal.

4 Comments

4 Comments

  1. Tawanda Norko

    February 14, 2019 at 3:45 am

    It’s actually a great and useful piece of information. I am glad that you shared this useful information with us. Please keep us up to date like this. Thanks for sharing.

  2. Denny Renick

    February 14, 2019 at 9:58 pm

    Wow! This could be one particular of the most useful blogs We’ve ever arrive across on this subject. Actually Wonderful. I am also a specialist in this topic so I can understand your hard work.

  3. Charity Gamby

    March 10, 2019 at 4:41 pm

    Your content is nothing short of brilliant in many ways. I think this is engaging and eye-opening material. Thank you so much for caring about your content and your readers.

  4. hemp deals

    March 12, 2019 at 11:37 pm

    I visit day-to-day some blogs and websites to
    read posts, however this website gives quality based writing.

Leave a Reply

Your email address will not be published.

You May Also Like

Analysis

But Chris Damas of the BCMI Cannabis Report notes the Aphria-merged firm will command a strong presence in Europe's medical cannabis market

Industry update

The Canadian pot product company says its Green Roads deal represents only the first step in its US expansion strategy

Industry update

The Canadian weed firm urges all shareholders to weigh in on the vote, which has been delayed to April 30

Industry update

CEO Simon says he expects to capture 30% of a $6B Canadian market following the Tilray merger and pandemic lifting