Aphria Inc. (APHA.TO) Formally rejected the unsolicited takeover bid from Green Growth Brands Inc.
"The Aphria Board of Directors believes that GGB's hostile offerings are significantly undervalued and inadequate and are not in the interest of Aphria's shareholders in several respects," Irfan Simon, Aphria's chairman, said in a statement on Wednesday.
"GGB offers shares in an illiquid company with limited operating history, minimal assets and no history in the cannabis industry," he added.
Simon went on to say there is no guarantee that Ohio-based Green Growth Brands, which is offering 1.5714 of its shares for each Aphria share, would be able to fund the combined company's capital requirements.
"Not surprisingly, they are rejecting the offer – it's all paper and a bit of a discount on the price," said John Zechner, president and founder of J. Zechner Associates, in an interview with BNN Bloomberg on Wednesday.
When it came to comment, a representative of Green Growth said the company will provide a response to the rejection of Aphria "in due course."
Aphria has until Thursday to respond to Green Growth's offer, which was formally presented last month, according to a Green Growth Brands representative. Unsolicited bidding is scheduled to expire on May 9.
After the offer was made, Aphria advised shareholders to suspend bids until a committee independent of its directors made a recommendation for full board.
Shares of Aphria fell in December, shortly after the report by the short sellers Quintessential Capital Management and Hindenburg Research, but they left the crisis after recovering substantially this month. The report accused Aphria of buying several Latin American assets at highly inflated prices. Investors still expect Aphria to publish a line-by-line replica for the report.
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