The chairman of Aphria (NYSE:APHA,TSX:APHA) has clarified his stance on a takeover bid from Green Growth Brands (GGB) (CSE:GGB) as the multi-state operator commits to its proposed strategy.

Following a statement from GGB restating its intentions to pursue the takeover, Irwin Simon, chairman of Aphria, told CNBC’s Squawk Box on Wednesday (January 2) there had been no official offer for the company.

When asked if GGB could serve as a potential strategic partner, Simon said currently “absolutely not.”

“First of all there has been no official offer for the company, ok? GGB came out and said they like to either partner or merge with the company,” Simon said.

However, he added there is a possibility of a partnership at a later date due to GGB’s experience in the retail side of the cannabis industry.

On Monday (December 31) Peter Horvath, CEO of GGB, said since launching its bid, it had noticed the interest from investors of the Canadian firm due to the premium offered and a new-found interest in the valuation of his company.

“When investors consider our trailing revenue, recent license wins in Nevada, and a buildout in the new market of Massachusetts they agree that it is not a question of if Green Growth reaches C$7.00 per share, but when,” said Horvath. “We understand that there are some in the market who want to focus on destroying value at Aphria, but we are committed to creating it.”

Last Thursday (December 27), GGB made public its bid for the ownership of Aphria to shareholders of both companies

The US-based venture offered 45.5-percent premium for holders of Aphria, valued at a price of C$11 per share. In exchange shareholders would receive 1.5714 common shares of GGB.

Aphria then officially turned down the proposal, saying GGB’s offer was 23 percent below the intended target.

“The Board has determined that the GGB proposal, as it currently stands, significantly undervalues the company,” Simon said in a statement.

Market confusion on Aphria and GGB relationship

In its new update to the market, GGB said Aphria doesn’t own any stake in GGB and none of its executives act as board members for the multi-state operator.

“The clearest evidence for lack of influence in Green Growth’s acquisition of Aphria is the fact Aphria’s board has refused to engage and rejected Green Growth’s premium offer,” the company said.

The most direct connection between the two is through a JV formed between the Schottenstein Group, which backs GGB, and Liberty Health Sciences (CSE:LHS) for an application of a processing and dispensary license in Ohio.

Liberty was originally created as a division of Aphria set to establish a presence in the US. However, due to TMX Group rulings and a possible delisting from the TSX, Aphria was forced to divest its stake in Liberty.

Aphria retains an option to buy back its stake in Liberty until 2023 thanks to the deal it created to sell its portion of the US company.

The Canadian cannabis producer also notified investors its “passive investment” in Green Acre Capital Fund II represented another investment connection to GGB.

New Aphria chairman offers response to GGB situation

During the interview, Simon added there is an option for Aphria to continue its strategy alone or find a partner in the vein Cronos Group (NASDAQ:CRON,TSX:CRON) or Canopy Growth (NYSE:CGC,TSX:WEED) have done.

Simon is a recent hire of Aphria, as he was appointed an independent chairman for the board of directors, replacing Aphria’s own CEO Vic Neufeld in the role.

He was instituted following the short seller attack Aphria faced from Quintessential Capital Management and Hindenburg Research calling into question its acquisitions in the Latin American market and its partners.

Investors are still awaiting for a full response from Aphria to all the issues raised by the short sellers.

Market reaction

Since announcing its takeover bid, GGB’s stock has seen a jump in its price and market value.

Despite its growth on Wednesday the multi-state operator closed the trading session with a 1.08 percent decline and a price per share of C$4.60.

Aphria enjoyed an increase to its stock in New York and Toronto, as the company finished with a price of US$6.02 and C$8.15 respectively.

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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