Green Growth Brands (CSE:GGB) Ends Aphria Takeover Bid, Earns $19 Million In Profits
Last year, Green Growth Brands (CSE: GGB) shocked investors when it revealed an attempt to take over Aphria. The company put together a team of experienced professionals who would run GGB as well as spearhead the hostile takeover. However, a recent statement indicates that the Green Growth has abandoned the bid.
The repurchase to help normalize relations after the takeover cancellation
In the statement, the company said that GGB and Aphria had reached an agreement to stop the takeover. Notably, Aphria allowed GGB to acquire Aphria shares, both issued and outstanding. The agreement also includes a repurchase of common shares belonging to GGB held under GA Opportunities Corp. (GAOC). In particular, the common shares amount to 27,300,000 and that brings the aggregate consideration to $89 million CAD.
According to the statement, the aggregate consideration is payable through secured promissory note and cash. Further, the company anticipates the share repurchase program to take up to six months. Interestingly, the whole repurchase program is happening at a huge discount. According to GGB, the intention is bring the takeover bid to an end without muddying the relationship between the two companies.
The GGB stock gains
During the last trading session on Aril 12, the GGB stock closed at $3.86. Based on this price, it is apparent that GGB will be repurchasing the Aphria shares at an implied rate of $6.07 per share. Interestingly, the Aphria stock closed the April 12 trading session at $13.41. The implication is that GGB will be getting a discount on the Aphria shares in the region of 54.8%. Notably, the discount translates to a profit of $19 million.
Since the beginning of the takeover talks last year, the GGB stock has gyrated but tended to move to the upper levels. In December last year after GGB had announced the intention to take over Aphria, the stock jumped 12% to $6.26. On the other hand, the Aphria stock began to experience doldrums which have extended into this year.
Yesterday, the GGB stock hovered at $3.84 and later closed the trading session at $3.83. Early today, the stock opened flat but the last six hours of trade show that it might close higher at around $3.90 which is about a 0.13% gain.
Aphria stock suffers in a bad week
On the contrary, the Aphria stock tumbled yesterday (April 15) after the news of the cancellation of the hostile takeover and the releasing of the Q3 financial results. Notably, the share price sunk 6.9% in premarket trade even when the company reported a 7-fold increase in revenues. In particular, the higher revenue came from subsidiaries including ABP and CC Pharma. Also, Aphria reported reduced sales numbers which fell from 3,408.9 to 2,636.5.
On its part, GGB looks like it is ready to take over the market and match the might of its Canadian rival. In the month of March, the company opened several retail shops including the Seventh Sense Botanical Therapy CBD shop. The retail shop opened at Mayfair Mall, Milwaukee. According to the company, the new stores will open up new opportunities and help grow their market share.