Green Growth Brands To Work With Tilray; Comes After GGB Commented on Offer for Aphria

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Alert Sent 2019-02-07 08:44:03 AM ET

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Update - Green Growth Brands To Work With Tilray; Comes After GGB Commented on Offer for Aphria

2019-02-07 08:43:37 AM ET (MT Newswires)



08:43 AM EST, 02/07/2019 (MT Newswires) -- Green Growth Brands Inc. (CSE: GGB, OTCQB: GGBXF) said Thursday that GGB Beauty LLC, a subsidiary, has executed a licensing agreement as of February 6, 2019 with Authentic Brands Group (ABG) and the Greg Norman brand. According to a related statement, the agreement is to develop a line of cannabidiol (CBD) infused personal care products designed for active adult men and women. As part of this arrangement, the company will be working with Tilray Inc. (TLRY) as the preferred supplier of the CBD ingredients to be used in these products.


Overnight Wednesday, GGB commented with respect to Aphria Inc.'s (TSX: APHA and NYSE: APHA) rejection of GGB's offer to acquire all of the issued and outstanding common shares of Aphria. GGB said it "continues to believe in the opportunity to combine the two businesses and benefit both groups of shareholders."


APHA was at last look down near 5% in US pre-market trade, having lost 9.4% on the NYSE yesterday.


GGB's statement in relation to Aphria said: "The combined entity of Aphria and GGB would create an unparalleled North American player with both Canadian and U.S. operations. GGB's Offer is one way to combine these businesses across borders, while creating significant value for shareholders of both companies. 


"Since its formation in 2018, GGB has pursued an expansion plan, including entry into new markets, designing a line of CBD-infused personal care products and through a combination of strategic partnerships, merger and acquisition activity and organic license capture. GGB intends to build out its business and sees the opportunity with Aphria as an important element of this strategy."


This comes after the chairman of Aphria said GGB's unsolicited all stock takeover offer significantly undervalues the Canadian pot company, adding that it's leaving the door open to other potential suitors, according to a BNN Bloomberg report late Wednesday afternoon. 


Earlier Wednesday, Aphria -- which has delayed in delivering, as promised, a line by line response to a short seller report of a few weeks ago that related to some of its overseas aquisitions -- rejected the hostile bid by GGB as "significantly undervalued and inadequate." 


Aphria shares -- which lost 9% on the TSX, Wednesday -- nearly halved towards the end of 2018 after the release of the controversial short seller report, but had shown signs of recovery of late, up to yesterday.


The GGB offer provides Aphria shareholders with 1.5714 common shares of GGB  for each Aphria share, including Aphria shares that may become issued and outstanding after the date hereof but prior to 5pm (Toronto time) on May 9, 2019 upon the exercise, conversion or exchange of any securities of Aphria that are exercisable for, convertible into or exchangeable for Aphria shares.

APHA Financials Jan 2019 A Look Back

• Net revenue of $21.7 million up 63% from prior quarter on initial sales to Canadian adult-use market; adjusted gross profit of $10.2 million
• To accelerate the production ramp-up post-Health Canada approvals, yields were lowered to build stockpiles for expanded facilities and to implement highly automated cultivation and harvesting
• Licence applications submitted for facilities expansions; annualized harvest expected to increase to 255,000 kilograms by the end of calendar 2019
• Successfully advanced international growth strategy with significant strategic alliances and investments in Europe and Latin American
• Co-founder Cole Cacciavillani and CEO Vic Neufeld will transition out of roles over the coming months, currently working with Aphria independent Chair Irwin D. Simon and President Jakob Ripshtein to plan succession and ensure orderly transition

LEAMINGTON, ON, Jan. 11, 2019 /PRNewswire/ - Aphria Inc. ("Aphria" or the "Company") (TSX: APHA and NYSE: APHA) today reported its results, for the second quarter ended November 30, 2018, and the decision by its Chief Executive Officer, Vic Neufeld, and Co-founder Cole Cacciavillani, to transition out of their executive roles over the coming months. Mr. Neufeld and Mr. Cacciavillani will remain in their current roles until such time. All amounts are expressed in thousands of Canadian dollars, unless otherwise noted and except for per gram, kilogram, kilogram equivalents, and per share amounts.

Key Operating Highlights

• 92% increase in kilogram equivalents1 sold, reflecting partial period sales from the opening of the Canadian adult-use market, as well as continued sales of medical cannabis to existing and new patients
• Adjusted gross margins of 47% of net revenue, compared to 64% in prior quarter, as expected, due to lower effective selling prices in adult-use market, as well as temporarily lowered yields and higher production costs related to facilities expansion and implementation of automation
• Part IV and V expansions of Aphria One awaiting Health Canada approval; application for cultivation licence at Aphria Diamond submitted and also awaiting Health Canada pre-cultivation inspection
• Announced and closed subsequent to quarter-end of the acquisition of CC Pharma, a leading distributor to pharmacies in Germany
• Closed acquisition of key operations and licenses in strategic Latin America and Caribbean jurisdictions; subsequently established additional strategic alliances in the region to expand the Company's medical cannabis operations and distribution
• Listed on the NYSE, providing shareholders greater liquidity
• Appointed new independent Chair of Board of Directors, Irwin D. Simon, subsequent to quarter-end
• Ended quarter with strong balance sheet and liquidity, including $152.1 million of cash and $32.7 million of liquid marketable securities, to fund announced Canadian and International growth and facilities expansion

Executive Transition

Aphria Chief Executive Officer Vic Neufeld, and Co-founder Cole Cacciavillani, are both nearing the end of their five-year journey with the Company and will transition out of their executive roles over the coming months but remain on the Board. Working closely with Irwin D. Simon, Aphria's recently appointed independent Chair, and President Jakob Ripshtein, Mr. Neufeld and Mr. Cacciavillani intend to complete a smooth and responsible transition to a globally-minded executive leadership team for the long-term benefit of the Company's patients, shareholders, customers, and employees.

Aphria Chair Irwin D. Simon commented, "Vic and Cole are consummate entrepreneurs. Thanks to their vision, energy and passion, Aphria has become a global player in an industry that didn't even exist five years ago. On behalf of the entire Aphria team, I want to express my gratitude to both. I look forward to working with them to further build Aphria's leadership team and continue driving long-term value for our patients, customers and employees into the future."

"When the Canadian medical cannabis market opened up five years ago, Cole was growing millions of potted flowers in Leamington, and he understood that cannabis was a natural product extension for the founding team's decades of experience as greenhouse growers in Leamington," said Mr. Neufeld. "Now with legalization and globalization, including a huge market opportunity with positive developments in the U.S., Aphria's next generation of leadership may take the reins. Building and leading a Company like Aphria, which exploded from an idea in late 2013 to our many successes to-date, has been an incredible journey, despite the toll it has taken on health, family and personal priorities."

"Vic and I have worked tirelessly for decades, building great businesses, but now in our sixties, it is time for both of us to step back from the demands of leading a world-class organization. Endless meetings, travel, deadlines, talent search - the list of executive responsibilities will only continue to grow," said Mr. Cacciavillani.

"Succession is the plan. Cole and I have informed the Board, and they have agreed, that we will begin the transition process immediately, and at the appropriate time, we will both step down from executive positions at Aphria. We continue to have the greatest pride in what Aphria has achieved, and its future has never looked brighter. From continued technology advancements, to continued support of scientific developments, to amazing adult-use brands, to globalization strategies, and most of all, the hundreds of dedicated passionate team members that have joined Aphria, we are well positioned to be a dominant player," concluded Mr. Neufeld.

The Board has requested that, following the transition, Mr. Neufeld and Mr. Cacciavillani continue to apply their knowledge and expertise as special advisors to both the Chair and the President, ensuring a smooth transition of institutional experience and strategic advice until a new CEO is appointed.

https://finance.yahoo.com/news/aphria-records-63-net-revenue-120600514.html