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Latest Offer: Aphria Urges Investors to ‘Take No Action’

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Jan. 24 2019, Published 12:00 p.m. ET

Aphria’s response

In response to Green Growth’s bid to acquire Aphria’s (APHA) outstanding common shares, which we discussed in the previous part, Aphria’s management provided a response to its shareholders. Aphria urged its shareholders to “take no action” on Green Growth’s offer until the company’s board “has made a formal recommendation to shareholders.”

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Similar offer

Aphria stated that the formal offer was “substantially identical” to the previous offer on December 27. Back then, the company said that the offer was significantly undervalued for Aphria shareholders. Calling the offer “opportunistic,” Aphria’s newly appointed chairman, Irwin D. Simon, said, “Any offer would necessarily need to be evaluated against the current and future value of our current strategic plan.”

Aphria has underperformed Cronos Group (CRON) this year, which you can see in the above chart. Aphria has also underperformed companies (HMMJ) including Canopy Growth (WEED) and CannTrust (CNTTF) this year.

While outlining the significant potential that the company holds, Aphria’s management thinks that there are factors to be considered that might not be reflected in Green Growth’s offer on January 23. While Aphria urged shareholders to wait, Green Growth indicated that shareholders seemed to be interested in taking up the offer.

In the press release on December 31, Green Growth indicated that it received early interest from “frustrated” shareholders looking to exit their investments. Green Growth affirmed that Aphria shareholders will continue to hold control with 60% ownership of the new entity.

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