A hostile takeover
Green Growth Brands will exchange 1.5714 common shares for each Aphria (APHA) share. In its SEDAR filing, Green Growth also offered some insight about the takeover proposal in the making. The company mentioned that it engaged with the board of Aphria about a friendly business combination with the provision to have Aphria’s management preserved along with board representation with the newly formed company. However, it appears that Aphria management did not bite, so Green Growth has taken the offer directly to the outstanding shareholders.
What this means for Aphria
One form of a hostile takeover is when the acquiring company, Green Growth in this case, directly approaches the shareholders of the company it wants to acquire about selling their shares. If Green Growth is successful in acquiring all of Aphria’s outstanding shares, it could have the control to replace the management.
Surprisingly, on the same day that the news of this takeover bid broke, Aphria issued a press release stating that it has replaced Vic Neufeld, who was the independent chair of the company’s board of directors, with Irwin Simon. The company said Vic Neufeld, however, will continue to be the CEO of the company.
While the revenue growth potential for Aphria, evident in the above chart, makes it clear why other companies would want to acquire the company, we’ll discuss other reasons why Green Growth is interested in Aphria in more detail next.