Green Growth Brands announces its intention to announce the purchase of Aphria Inc.
- Offer worth 11.00 Canadian dollars per share of Aphria
- Significant and convincing premium of 45.5% to the closing price of Aphria on December 24, 2018
- Parallel financing of 300 million Canadian dollars in Green Growth at 7.00 Canadian dollars per share
- Creates the only major operator linking the US and Canadian markets; no other Canadian LPs work in scale in both markets
COLUMBUS, Ohio, December 27, 2018 (GLOBE NEWSWIRE) – Xanthic Biopharma Inc. doing business since Green Growth Brands Ltd. (“Green Growth”) (CSE: GGB) announced today that it now intends to make an offer (“Offer”) for the purchase of all issued and outstanding common shares (“Aphria Shares”) of Aphria Inc. ("Aphria" or "Company") (TSX: APHA and NYSE: APHA), which it does not yet own.
The offer will provide Aphria shareholders with 1.5714 ordinary Green Growth shares (“Green Growth Shares”) for each Aphria share and represent premiums of 45.5% of the Aphria closing price on the Toronto Stock Exchange (“TSX”) on December 24, 2018. and 46.0% compared with the Aphria's weighted average price of TSX for the last 10 trading days ending December 24, 2018. The proposal estimates Aphria at approximately 2.8 billion Canadian dollars (2.1 billion US dollars) at a rate of 7.00 Canadian dollars per share for Green. Shares Growth.
We believe that our offer will create value for the shareholders of Aphria and Green Growth. We are confident that the substantial premium we offer and the opportunity to participate in the growth of a stronger combined company are so convincing that we offer our offer directly to Aphria shareholders.
Peter Horvat, CEO, Green Growth
Together, we can develop synergies between our teams, assets and territories, forming a joint venture that will accelerate our collective growth strategies in Canada, the United States and abroad.
Green Growth plans to complete simultaneous brokerage financing in the amount of 300 million Canadian dollars at a price per share of 7.00 Canadian dollars in order to both demonstrate confidence in the cost of reimbursement under the Proposal and finance the growth of the combined company's business. Green Growth expects some of its existing shareholders to commit themselves to support financing in the amount of 300 million Canadian dollars simultaneously with the conclusion of an agreement to merge business with Aphria or to acquire shares within the framework of the expected offer.
Before announcing its intention to transfer the Offer directly to shareholders, Green Growth asked the Aphria board to agree on a friendly business combination, which included, among other things, a very short period of exclusivity to allow both parties to seriously consider the possibility of a merger; full provision of the store in favor of Aphria; and maintaining Aphria’s governance and commitment to representing the board of directors in the merged company. Shareholders of Aphria should remember that Green Growth proposed that after a friendly business combination with the support of the board of directors of Aphria Green Growth invested $ 50 million. US equity at a cost of Aphria per share of $ 11.00.
Why joint green growth and Africa is better for shareholders
The combination of Aphria and Green Growth is the fastest way to create significant value for shareholders of both companies. Merged entity:
Creates an unprecedented North American player with operations in Canada and the United States. Aphria has a large office in Canada and has supply agreements with all Yukon provinces and territories, as well as strong strategic partnerships that enter into wholesale supply agreements. Green Growth manages vertically integrated cannabis operations, including growing, manufacturing and retail assets in Nevada, including recently obtained seven licenses for the retail sale of cannabis. Together, the pro forma company will have a solid foundation, extensive retail relationships and infrastructure to ensure significant growth in the future as international markets evolve.
Increases the footprint and creates an excellent American consolidator. The combined company will be the largest US market capitalization operator and the only North American cannabis operator.
Combines the production capacity of Aphria and the production capacity of Green Growth. The combined company will combine the low cost of cultivation and the short-term production capacity of Aphria with Green Growth's extensive retail know-how to capture market share while maintaining profitability. Aphria’s current cash costs per gram are 1.30 Canadian dollars and are expected to decrease to 0.95 Canadian dollars per gram with an estimated annual capacity of more than 250,000 kg by the beginning of 2019 (presentation for Aphria investors in the first quarter of 2019 from October 11, 2018). Green Growth’s strong management team has a proven track record at the retail level and already has a best-in-class dispensary in Las Vegas.
Readiness to take advantage of transformational regulatory changes related to cannabis in the world's largest cannabis market. In the near future, Green Growth will present a consumer-oriented CBD product line, initially focused on topical and balsamic products, and has every chance to benefit from further regulation of cannabis consumption in the United States in the near and medium term.
It combines best-in-class management teams: experience in the pharmaceutical and greenhouse areas of Aphria and Green Growth's proven retail experience. The Aphria team consists of veterans of the greenhouse industry and proven operators of large pharmaceutical companies. CEO Green Growth has held senior positions at a number of well-known retail chains, including Designer Shoe Warehouse Inc. and L Brands Inc. (Victoria's Secret). In addition, Green Growth's largest shareholder, the Shottenstein family, has deep relationships in the retail sector.
Benefits for Aphria Shareholders
Although Aphria shareholders may be discouraged by recent events and see that their investments have significantly affected, they should be aware of the immediate advantages of the Proposal and the reasons for the bidding:
- Significant and immediate premium of 45.5% to the market price.
- Significant ownership position in the merged company, which is ready for further growth.
- Potential to further reduce the price of shares, if the offer is not accepted.
Green Growth believes that it already supports the proposal from Aphria shareholders, owning approximately 10% of the Aphria shares placed. Green growth has also acquired a significant position in Afria.
Following the offer, it is expected that Green Growth will continue to be quoted on the Canadian Stock Exchange under the symbol GGB.
Questions? Need more help? Shareholders of Aphria should contact Kingsdale Advisors, the Information Agent and Depository of the Offer, by calling 1-866-851-3214 (toll-free number in North America) or by calling + 1-416-867-2272 (outside North America) or by email mail to: firstname.lastname@example.org.
Intention to make an offer
It is expected that the full information on the offer will be set out in the official offer and the circular takeover offer, which is expected to be sent to Aphria shareholders, a copy of which will be posted on www.sedar.com in the Aphria profile section. Green Growth plans to officially launch the offer and distribute it to Aphria shareholders in the coming weeks.
Readers are warned that Green Growth may decide not to make an offer if (i) Aphria implements or tries to apply defensive tactics in relation to the Offer, (ii) Green Growth discloses or its intended funding sources disclose or otherwise identify information suggesting that the business , Aphria's affairs, prospects or assets were impaired or disclosed, or otherwise identifies other undisclosed material adverse information relating to Aphria, or (iii) Aphria decides to join Green Growth to agree Ania conditions combined transaction and Aphria and Green Growth decide to: conduct the transaction using a different structure from a takeover bid, for example, the plan agreement. Accordingly, there can be no assurance that the Proposal will be made or that the final terms of the Proposal will be as set forth in this news release. In addition, the estimated use of parallel brokerage financing in the amount of 300 million Canadian dollars at a price per share in the amount of 7.00 Canadian dollars and the estimated support obligation in this regard depend on various contingencies and conditions, including the satisfactory completion of the usual payment diligence for both Aphria and Green Growth, an agreement on mutually acceptable final documentation and other customary obligations and conditions. No binding commitments of any kind have yet been made in this regard, and readers should not assume that any such commitment will be made until it is reflected in a mandatory document agreed upon by the intended funding sources, which cannot and should not be assumed or guaranteed.
The proposal will be implemented in accordance with the National Instrument 62-104 – Takeover Orders and the Issuer's Application and will depend on a number of usual conditions, including: (i) they will be deposited as part of the Offer and not withdrawn, at least 66 2/3 % of Aphria Shares Placed (calculated on the basis of full dilution), excluding Aphria Shares owned by Green Growth; (ii) obtaining all government approvals, regulatory authorities, stock exchanges and third parties that Green Growth deems necessary or desirable in connection with the Offer; (iii) there was no legal prohibition on Green Growth making the Offer or accepting and paying Aphria for Athens; (iv) Aphria did not accept or implement a shareholder rights plan, dispose of any assets, incur any substantial debts, make any changes to its capital structure, or otherwise introduce or try to use defensive tactics; (v) there have been no significant adverse changes in the business, affairs, prospects or assets of Aphria; (v) Green Growth does not recognize that Aphria made a wrong statement about a material fact or did not indicate a material fact that must be made to any securities regulator; (vi) approval by Green Growth shareholders in accordance with the policy of the Canadian Stock Exchange; and (vii) the statutory minimum condition that 50% of the Aphria Shares were transferred to the Offer, with the exception of the Aphria Shares, which are owned or controlled by Green Growth (which cannot be waived). If the Proposal continues, Green Growth plans to convene a meeting of shareholders in the first quarter of 2019 to consider the decision to approve the issuance of Green Growth shares in connection with the Proposal. Green Growth expects that the Offer, when made, will remain open during the acceptance period of at least 105 days from the date of its circular takeover offer. The board of directors of Aphria can significantly reduce this minimum offer period, which will allow shareholders to receive the benefits of a Green Growth offer in just 35 days. Shareholders of the Company are advised to contact Aphria and urge management and the Board to allow the acquisition of Green Growth as soon as possible.
Green Growth Brands retained Canaccord Genuity as financial advisor, Norton Rose Fulbright Canada LLP as legal adviser, and Kingsdale Advisors as strategic shareholder, communications consultant and depositary.
About green growth brands
Green Growth brands are expected to dominate the cannabis and CBD markets with a portfolio of emotional brands that people like. Under the leadership of well-known retailer Peter Horvath, the GGB team is full of retail renegades with years of experience creating successful brands. Join the movement at GreenGrowthBrands.com.
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