Cannabis Weekly Round-Up: Public Takeover Bid for Aphria

- December 28th, 2018

The Investing News Network rounds up some of the biggest company and market news in the cannabis market for the past trading week.

During the past trading week (December 24 to 28), a surprising takeover bid was launched by a US-based multi-state cannabis operator for one of the biggest Canadian producers.

The response from Aphria (NYSE:APHA,TSX:APHA) about the merger possibility also caught the attention of shareholder curious to find out more about this bid. Alongside a new estimation from a cannabis economist for the US sector in 2018.

Here’s a closer look at what some of the biggest news was during last week’s trading period.

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Aphria issues response to public bid from GGB

Despite the fewer trading days in Canada due to the holidays the cannabis market continued to offer investors a roller-coaster of announcements, as Green Growth Brands (GGB) (CSE:GGB) launched a public takeover bid for Aphria and pleading to its shareholders to accept.

GGB offered Aphria holders a payment of 1.5714 of its own common shares per Aphria share, valuing the Canadian producer at C$11 per share.

“We are confident that the significant premium we are offering and the opportunity to participate in the growth of a stronger, combined company are so compelling that we are taking our offer directly to Aphria’s shareholders,” Peter Horvath, CEO of GGB said in a statement.

According to GGB the US operator had already secured support from approximately 10 percent of Aphria shareholders.

On Friday (December 28) Aphria responded to GGB by calling out its unsolicited offer due to a low valuation. Aphria said:

Based on the 20-day volume weighted average price of GGB shares and the expressed exchange ratio of 1.5714 common shares of GGB for each Aphria share, the proposed bid would be approximately 23 [percent] below the Company’s average share price over the same period.

“While we appreciate GGB’s interest… their proposal falls short of rewarding our shareholders for participating in such a transaction,” said Irwin Simon, chair of Aphria. “Further, the proposed offer is quite risky given GGB’s condition to complete a brokered financing at a price that is more than double the recent average of their share price, as a key term to the proposal.”

In its statement GGB warned Aphria shareholders declining the offer could lead to the possibility of “further downward share price impact” for the Canadian firm.

US cannabis market gets US$10 billion in 2018

Beau Whitney, vice president and senior economist with cannabis research and data venture New Frontier Data told NBC News investors had participated in the American marijuana space with US$10 billion throughout 2018.

“Investors are getting much savvier when it comes to this space because even just a couple of years ago, you’d throw money at it and hope that something would stick,” Whitney said. “But now investors are much more discerning.”

Whitney said the investment figure seen in 2018 for the US cannabis market topped the amount for the past three years, representing rapidly growing interest in the space.

He expects during 2019 for the total North American cannabis market to attract over US$16 billion.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Green Growth Brands is a client of the Investing News Network. This article is not paid-for content.

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** This article is updated each week. Please scroll to the top for the most recent information**

Cannabis Weekly Round-Up: Tilray Gets Partnership with AB InBev

By Bryan Mc Govern, December 21, 2018

During the past trading week (December 17 to 21), Tilray (NASDAQ:TLRY) confirmed a new collaboration partnership with a global alcohol company to develop cannabis-infused beverages.

The decision from a major Canadian bank to participate in cannabis stock deals including mergers and acquisitions (M&A) also made headlines throughout the week, alongside the issuance of new retail licenses in New Jersey and Pennsylvania.

Here’s a closer look at what some of the biggest news was during last week’s trading period.

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Royal Bank of Canada (RBC) (TSX:RY) announced it would begin pursuing deals in the Canadian cannabis scene by covering the sector with a dedicated analyst and setting up a division looking to participate in deals within the space.

“We’re going to be selective in our approach, frankly, but within the bank we’ve established a policy that we’re comfortable with,” RBC Capital Markets head Doug McGregor told Bloomberg on Tuesday (December 18).

Tilray obtains two critical deals during the week

Canadian cannabis firm Tilray was able to deliver a packed week of announcements with two key collaborations with the pharmaceutical and alcohol industries.

Tilray confirmed its interest in the infused-beverage market thanks to a new research partnership global leading brewer Anheuser-Busch InBev SA/NV (NYSE:BUD), the company behind Budweiser beer.

The two companies will invest up to US$50 million in a new venture set in London, Ontario tasked with developing these beverages for the Canadian adult-use market. Edibles and infused cannabis items are set to be legalized sometime in 2019.

Additionally, the cannabis company extended a partnership with Sandoz Canada to now include its parent company Sandoz AG, which is part of the Novartis (NYSE:NVS) group.

The purpose of this collaboration is to work on the development of new medical cannabis products. Thanks to the deal, Sandoz has gained options to the cannabis market.

Sandoz may opt to participate in the commercialization of non-smokable medical products. The pharmaceutical company will also gain access to the lineup of products from Tilray and its licenses.

Farm bill opens the doors to CBD derived from hemp industry

Following approvals by the Senate and House of Representatives, on Thursday (December 20) US president Donald Trump signed a US$867 billion farm bill into law, which carries within it the legalization of hemp.

Research from Brightfield Group of Chicago shows the North American CBD from hemp industry could be worth US$22 billion by 2022. With these market projections, a variety of companies have announced plans to pursue this new market.

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“Hemp’s removal from the CSA has been a core legal requirement for many national retailers wanting to carry whole-plant hemp extracts,” Hess Moallem, President and CEO of Charlotte’s Web Holdings (CSE:CWEB) said in a statement.

Peter Horvath, CEO of Green Growth Brands (CSE:GGB), said the new bill allows his company to build out “operations and logistics” for its CBD strategy in the US.

Among the companies celebrating the passing of the bill was also Canopy Growth (NYSE:CGC,TSX:WEED), which announced it would “participate in the American market now that there is a clear federally-permissible path to the market.”

New cannabis licenses for New Jersey and Pennsylvania

US states of New Jersey and Pennsylvania issued new cannabis retail license to a variety of companies in the space, including a few public players.

The Pennsylvania Department of Health allowed 23 new retail licenses, each entitling the issuers with the option to build out three medical marijuana dispensaries. These licenses represent the second stage of the dispensary roll-out for the state.

The public companies awarded licenses for Pennsylvania were Cresco Labs (CSE:CL), Harvest Health & Recreation (CSE:HARV), Green Thumb Industries (CSE:GTII) and MedMen Enterprises (CSE:MMEN) by way of its acquisition of PharmaCann.

Meanwhile, for New Jersey only 3 publicly traded companies won licenses during this latest round: GTI, TerrAscend (CSE:TER) and MPX Bioceutical (CSE:MPX), which its US assets are set to be acquired by iAnthus Capital Holdings (CSE:IAN).

New Jersey Health Commissioner Dr. Shereef Elnahal said the state Department of Health will meet with the six applicants “early next year” to hash out the specifics of growing product and when stores would be opening in the designated region.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Green Growth Brands is a client of the Investing News Network. This article is not paid-for content.

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