Aphria says Green Growth's proposed hostile bid undervalues company

2018-12-28 10:26:33 AM ET (Reuters)


(Adds analyst comment, details about valuation; updates share movement)

Dec 28 (Reuters) - Canadian cannabis producer Aphria Inc said on Friday Green Growth Brands Ltd's proposed C$2.8 billion ($2.06 billion) all-stock hostile bid "significantly" undervalued the company.

U.S. cannabis retailer Green Growth said on Thursday it would offer 1.5714 shares for each Aphria share. The company said its valuation was based on a price of C$7 per share.

Aphria's shares were up 11.5 percent at C$8.44, while those of Green Growth rose 3.4 pct to C$5.15 in early trading.

Green Growth's offer is "based on a hypothetical valuation of its own shares, with no relation to the current price," Aphria said on Friday. The company also did not give enough time to respond, before making the offer public, Aphria added.

In an emailed statement on Friday, Green Growth Chief Executive Officer Peter Horvath said the offer would create value for shareholders of both companies.

"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," Horvath said.

The buyout offer is unlikely to succeed, according to Chris Damas, editor of the BCMI Cannabis Report, a newsletter on investment in cannabis stocks.

"It is an opportunistic attempt to buy a larger company and I doubt it will be successful," Damas said.

House Positions for C:WEED from 20181228 to 20181228

House	Bought	$Val	Ave	Sold	$Val	Ave	Net	$Net
7 TD Sec	91,479	3,342,628	36.54	63,565	2,324,270	36.565	27,914	-1,018,358
13 Instinet	25,140	917,330	36.489	5,900	215,711	36.561	19,240	-701,619
33 Canaccord	5,080	186,762	36.764	277	10,114	36.513	4,803	-176,648
39 Merrill Lynch	27,285	998,010	36.577	22,929	836,783	36.495	4,356	-161,227
9 BMO Nesbitt	21,065	771,036	36.603	16,791	613,835	36.557	4,274	-157,201
53 Morgan Stanley	3,210	117,334	36.553	726	26,481	36.475	2,484	-90,853
5 Penson	15,878	580,286	36.547	14,364	527,505	36.724	1,514	-52,781
222 JP Morgan	1,400	51,014	36.439	0			1,400	-51,014
80 National Bank	10,155	370,717	36.506	8,825	322,972	36.597	1,330	-47,745
143 Pershing	1,429	52,026	36.407	373	13,656	36.611	1,056	-38,370
90 Barclays	1,000	36,339	36.339	0			1,000	-36,339
79 CIBC	151,485	5,530,045	36.506	150,676	5,502,880	36.521	809	-27,165
14 ITG	635	23,019	36.25	2	73	36.50	633	-22,946
57 Interactive	605	22,183	36.666	274	9,959	36.347	331	-12,224
72 Credit Suisse	300	10,951	36.503	0			300	-10,951
70 Manulife	100	3,632	36.32	0			100	-3,632
3 AltaCorp	1,878	68,787	36.628	1,861	68,215	36.655	17	-572
68 Leede	200	7,326	36.63	200	7,353	36.765	0	27
36 Latimer	0			37	1,367	36.946	-37	1,367
28 BBS	0			45	1,633	36.289	-45	1,633
88 Credential	2,675	97,357	36.395	2,860	104,295	36.467	-185	6,938
15 UBS	0			200	7,296	36.48	-200	7,296
99 Jitney	2,900	105,758	36.468	3,200	116,841	36.513	-300	11,083
65 Goldman	100	3,658	36.58	500	18,262	36.524	-400	14,604
56 Edward Jones	0			475	17,536	36.918	-475	17,536
62 Haywood	500	18,350	36.70	2,000	73,270	36.635	-1,500	54,920
124 Questrade	5,665	207,058	36.55	7,703	282,165	36.631	-2,038	75,107
101 SG Capital	0			3,374	124,475	36.892	-3,374	124,475
74 GMP	0			6,594	240,264	36.437	-6,594	240,264
19 Desjardins	5,625	206,653	36.738	14,060	513,120	36.495	-8,435	306,467
1 Anonymous	125,849	4,594,369	36.507	135,855	4,955,827	36.479	-10,006	361,458
2 RBC	21,174	774,166	36.562	38,255	1,397,025	36.519	-17,081	622,859
85 Scotia	23,222	849,216	36.569	44,113	1,612,827	36.561	-20,891	763,611
TOTAL	546,034	19,946,010	36.529	546,034	19,946,010	36.529	0	0