December 28, 2018 / 3:28 PM / 6 months ago

UPDATE 2-Aphria says Green Growth's proposed hostile bid undervalues company

(Adds Breakingviews link, background, updates share price)

Dec 28 (Reuters) - Canadian cannabis producer Aphria Inc said on Friday Green Growth Brands Ltd’s proposed C$2.8 billion ($2.06 billion) all-stock hostile bid “significantly” undervalued the company.

U.S. cannabis retailer Green Growth, which merged with Xanthic Biopharma Inc in November, said on Thursday it would offer 1.5714 shares for each Aphria share. The company said its valuation was based on a price of C$7 per share.

Aphria’s shares were up 11.2 percent at C$8.42, while those of Green Growth rose 1.6 percent to C$5.06 in early afternoon trading.

Green Growth’s offer is “based on a hypothetical valuation of its own shares, with no relation to the current price,” Aphria said on Friday. The company also did not give enough time to respond, before making the offer public, Aphria added.

In an emailed statement on Friday, Green Growth Chief Executive Officer Peter Horvath said the offer would create value for shareholders of both companies.

“Together, we can unleash synergies between our teams, assets and geographies, forming a combined enterprise that will accelerate our collective growth strategies in Canada, the U. S. and overseas,” Horvath said.

The buyout offer is unlikely to succeed, according to Chris Damas, editor of the BCMI Cannabis Report, a newsletter on investment in cannabis stocks.

“It is an opportunistic attempt to buy a larger company and I doubt it will be successful,” Damas said.

($1 = 1.3599 Canadian dollars)

Reporting by Debroop Roy in Bengaluru; Editing by James Emmanuel

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