Back in February, Green Growth Brands (GGB), with a market cap of $730+ million, launched an audacious bid to takeover Aphria (APHA), itself valued at $2.5 billion. The offer was in the form of an exchange of 1.57 shares for each APHA share. At last check, the offer is worth $1.15 billion. Needless to say; no rational individual will tender their shares at these levels.
The offer is open until May 9, and that leaves open the possibility that GGB will sweeten its offer. (GGB is backed by the Schottenstein family whose net worth is estimated at $2.8 billion. This is hardly chump change, but it doesn’t change the fact the deal makes little sense.)
This may sound like a bold statement considering the success of Jay Schottenstein (who backed American Eagle Outfitters and DSW). Owning APHA would give GGB its first exposure to the recently legalized cannabis market in Canada.
Aphria has distribution agreements for recreational cannabis that covers virtually all of Canada, as well as in Europe, South America, Africa, and Australia. Also, Aphria is currently running at just under CA$100 million ($75.06 million) in revenues (as well as a CA$85 million—$63.80 million—operating loss). Even considering the losses, it is easy to see why the Schottenstein family is singing “Oh Canada”.
Aphria has several brands aimed at different market segments. Names include Broken Coast, Good Supply, RIFF, and Goodfields. Much like any packaged goods company (think Procter & Gamble), Aphria brands produces and distributes whatever retail volume comes from online sales.
Retail is at GGBs core
Green Growth also produces and distributes to brands like Seven7h Sense and Meri+Jayne, as well as to retail venues that include Green Lily and The+Source dispensaries. GGB management includes recently appointed CEO Peter Horvath and