Green Growth Brands fell 7.75%
On February 6, Green Growth Brands (GGBXF) fell by 7.75%. The sharp decline in the stock price came on the back of Aphria’s (APHA) rejection of GGBXF’s hostile bid to take over APHA. At the same time, the US-listed Aphria went down by 9.4% for rejecting the takeover bid.
Aphria cited the following reasons for the rejection of Green Growth’s hostile bid:
- Green Growth’s bid significantly undervalued APHA considering its current growth and future growth potential. The bid reflected a 23% discount based on the 20-day volume-weighted average price.
- If the bid is accepted, Aphria fears that Green Growth could engage in illegal activity that could result in delisting from TSX and the NYSE.
- Aphria also said that due to Green Growth’s lack of experience in the cannabis sector, the company would not add any value to its shareholders.
Aphria’s independent board chair, Irwin D. Simon, said, “Today, Aphria is in a better position than ever to create long-term value for our shareholders, following a positive second quarter and continued progress expanding our production capacity and global footprint. Over the past five years, we have built a strong foundation for a leading global cannabis company in cultivation, manufacturing, research and distribution infrastructure, as well as forging strategic investments and alliances to efficiently scale around the world.”
The break up of this deal also had an adverse impact on the ETFMG Alternative Harvest ETF (MJ), which declined 5.25%. The fund also provides exposure to Canopy Growth (CGC), Tilray (TLRY), and Aurora Cannabis (ACB) with weights of 10.1%, 8.5%, and 7.3%, respectively.