Today, Green Growth Brands (CSE:GGB) (OTC:GGBXF) announced that it is accelerating the expiry of its takeover bid of Aphria Inc.(TSX:APHA) (NYSE:APHA) and, in turn, will be repurchasing 27.3 million common shares for aggregate consideration of $89 million CAD.
Green Growth Brands announced Monday that it has reached an agreement with Aphria to shorten the expiry time for acceptance of its formal bid to acquire all of the issued and outstanding common shares of Aphria from May 9, 2019, at 5:00 p.m. EST to April 25, 2019, at 5:00 p.m. EST.
GGB will be repurchasing 27,300,000 of its common shares which are held by GA Opportunities Corp. for aggregate consideration, which will be paid through a combination of cash and a secured promissory note, payable in 6 months from the closing of the repurchase.
Green Growth Brand’s repurchase of its common shares will allow for the elimination of the second largest block of its outstanding shares at a price that is significantly below the market price.
“We are pleased to be buying back 27,300,000 shares owned by GA Opportunities significantly below the market price and the expected sale of our toehold position of 3 million shares of Aphria, all of which will benefit our shareholders,” said Peter Horvath, CEO of Green Growth Brands in the news release.
Looking at the closing price of $3.86 per Green Growth share on the Canadian Securities Exchange as of the last trading day April 12, 2019, the implied offer consideration is $6.07 per Aphria share, representing a 54.8% discount to the Aphria shares’ closing price of $13.41 on the Toronto Stock Exchange on Friday, April 12, 2019.
Now that Green Growth Brands is closing the door on its Aphria takeover offer, the company will be concentrating on its CBD business and multistate operator (MSO) cannabis retail goods business.
“We are bringing our offer to an end on good terms with Aphria and are excited to turn our focus to our CBD personal care and retail cannabis businesses. We are actively continuing to review other partnerships and M&A opportunities to accelerate the build-out of our company.” Horvath said.
This announcement comes nearly two months after Green Growth Brand’s hostile takeover was formally rejected by Aphria Inc.(TSX:APHA) (NYSE:APHA), which sent the APHA stock down over 9% on the NYSE. In its official rejection, Aphria called the buyout bid “significantly undervalued and inadequate.”
Green Growth Brands’ offer was valued at $11 CAD per Aphria share, which represented a premium of 45.5% over its closing price on December 24, 2018. This gained the attention of Aphria shareholders at the time, after their confidence in the company was rocked by reports about its “worthless” $280 million CAD investment in Latin American acquisitions.
Both Aphria and Green Growth Brands agree that this proposed transaction is superior to the takeover offer by GGB.
According to Aphria’s Interim CEO Irwin D. Simon, “We are very pleased to move forward with this favorable resolution as we continue to focus on the long-term growth of our leading cannabis business. We plan to use the $89.0 million in proceeds from the transaction to fund our strategic global expansion initiatives.”
Green Growth Brands stock price reacted unfavorably to the news, dropping 3.37% by 3:30 pm EST to $3.37 CAD.