Legal Cannabis Market Growth Set to Accelerate After Recent Elections
FinancialBuzz.com News Commentary
NEW YORK, December 28, 2018 /PRNewswire/ --
Earlier this November, cannabis advocates scored several important ballots wins on Election Day. Michigan was one of the states that voted to approve recreational use of cannabis and has now become the 10th legalized state in the U.S. In addition, Utah and Missouri legalized medical cannabis use. According to recent data published by New Frontier Data, the three new markets are projected to account for more than USD 1.2 Billion in additional sales for a combined total of USD 2.1 Billion in total legal sales by 2025. This increase will create more than 30,000 additional cannabis jobs over the same period. After the midterm elections, cannabis legalization, of some form, has occurred in about 60% of the country and based on New Frontier's research, legal retail sales revenues are currently estimated to be USD 10.3 Billion in 2018. Green Growth Brands (OTC: GGBXF), Aphria Inc. (NYSE: APHA), Tilray, Inc. (NASDAQ: TLRY), Canopy Growth Corporation (NYSE: CGC), Aurora Cannabis Inc. (NYSE: ACB)
Medical cannabis accounted for most of the market last year, with the pain management sub-segment holding around 75% of the medical market valuation, or USD 5.48 Million. With research and technology rapidly evolving in the medical cannabis market, regulators are expected to tone down restrictions. Now, after Utah and Missouri have moved to legalize medical cannabis, the move highlights the widespread appeal of the products. "The prospects for moving cannabis legislation are better if the House can pass bills," Vivien Azer, a Cowen analyst covering the cannabis industry, told CNBC before the midterm results. "Given popular support for cannabis legislation and a preference by many Senate Republicans to respect state's rights, a GOP Senate could advance a cannabis bill."
Green Growth Brands (OTCQB: GGBXF) just announced breaking cannabis news late yesterday that has many financial news outlets talking about, "Xanthic Biopharma Inc. doing business as Green Growth Brands Ltd. ("Green Growth") (CSE: GGB) announced today that it currently intends to make an offer (the "Offer") to purchase all of the issued and outstanding common shares (the "Aphria Shares") of Aphria Inc. ("Aphria" or the "Company") (TSX: APHA andNYSE: APHA) which it does not already own.
The Offer will provide Aphria shareholders with 1.5714 common shares of Green Growth (the "Green Growth Shares") for each Aphria Share and represents premiums of 45.5% over Aphria's closing price on the Toronto Stock Exchange (the "TSX") on December 24, 2018 and 46.0% over Aphria's volume weighted average price on the TSX for the last 10 trading days ended December 24, 2018. The Offer values Aphria at approximately C$2.8 billion (US$2.1 billion) based on a valuation of C$7.00 per share for Green Growth Shares.
"We believe our offer will create value for both Aphria and Green Growth shareholders. 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. 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," said Peter Horvath, CEO of Green Growth.
Green Growth expects to complete a concurrent brokered financing of C$300 million, at a price per share of C$7.00, to both illustrate confidence in the value of the consideration under the Offer and to fund the business growth of the combined entity. Green Growth expects that certain of its existing shareholders will commit to backstop the C$300 million financing concurrently with the execution of a business combination agreement with Aphria or the take up of shares under the anticipated Offer.
Prior to announcing its intention to take the Offer directly to shareholders, Green Growth engaged Aphria's board to attempt to negotiate a friendly business combination that included, among other things, a very short exclusivity period to allow both parties to seriously consider the combination; a full go-shop provision in favor of Aphria; and the preservation of Aphria's management and commitment to board representation at the combined company. Aphria's shareholders should be aware that Green Growth offered that upon a friendly business combination with support from Aphria's board, Green Growth would invest C$50 million in equity at an Aphria per share value of C$11.00.
Why a Combined Green Growth and Aphria is Better for Shareholders. Combining Aphria with Green Growth is the fastest way to create significant value for shareholders of both companies. The combined entity:
Creates an Unparalleled North American Player with Canadian and U.S. Operations. Aphria has a large footprint in Canada and supply agreements with all provinces and the Yukon Territory and strong strategic partnerships establishing wholesale supply agreements. Green Growth operates vertically integrated cannabis operations including cultivation, manufacturing and retail assets in Nevada, including recently being awarded seven retail cannabis dispensary licenses. Together, the pro forma company will have a strong foundation, extensive retail relationships and infrastructure to capture significant future growth as international markets evolve. Increases Scale, Footprint, and Creates the Preeminent U.S. Consolidator. The combined company will be the largest U.S. operator by market capitalization and the only North American cannabis operator.
Combines Aphria's Cultivation and Production Capacity with Green Growth's Retail Strength. The combined company will marry Aphria's low-cost cultivation and near-term production capacity with Green Growth's vast retail know-how to capture market share while maintaining lean margins. Aphria's current cash cost per gram is C$1.30 and is expected to further decrease to C$0.95 per gram with projected annual capacity of over 250,000 kg by early 2019 (Aphria Q1 2019 Investor Presentation dated October 11, 2018). Green Growth's strong management team has a proven track record of delivering at the retail level and is already operating a best-in-class dispensary in Las Vegas.
Poised to Benefit from Transformational Cannabis-Related Regulatory Changes in the World's Largest Cannabis Market. Green Growth will soon be rolling out a consumer-focused line of CBD products, initially focused on topicals and balms, and is well-positioned to benefit from further pro-cannabis U.S. regulation in the near-to-medium term.
Unites Best-in-Class Management Teams: Aphria's Pharmaceutical and Greenhouse Operational Experience and Green Growth's Proven Retail Expertise. Aphria's team is comprised of veterans in the greenhouse industry and proven operators of large pharmaceutical companies. Green Growth's CEO held senior positions at a number of well-known retailers including Designer Shoe Warehouse Inc. and L Brands Inc. (Victoria's Secret). Additionally, Green Growth's largest shareholder, the Schottenstein family, has deep relationships in the retail sector.
Benefits to Aphria Shareholders - While Aphria shareholders may be discouraged by recent events and having seen their investment significantly impacted, they should be aware of the immediate benefits of the Offer and reasons to tender:
Significant and immediate 45.5% premium to market price.
Meaningful ownership position in a combined entity that is poised for further growth.
Potential for further downward share price impact if the Offer is not accepted.
Green Growth believes it already has support for the Offer from Aphria shareholders holding approximately 10% of the outstanding Aphria Shares. Green Growth has additionally acquired a meaningful toehold position in Aphria. It is expected that following the Offering Green Growth will continue to be listed on the Canadian Securities Exchange under the symbol GGB.
Questions? Need more help? Aphria shareholders should contact Kingsdale Advisors, the information agent and depositary for the Offer, at 1-866-851-3214 (North American Toll-Free Number) or +1-416-867-2272 (Outside North America) or via email at [email protected].
Intention to Make an Offer - Full details of the Offer are expected to be set out in the formal Offer and take-over bid circular which is expected to be mailed to Aphria shareholders, a copy of which is expected to be available at www.sedar.com under Aphria's profile. Green Growth expects to formally commence the Offer and mail the Offer and take-over bid circular to Aphria shareholders over the coming weeks.
Readers are cautioned that Green Growth may determine not to make the Offer if (i) Aphria implements or attempts to implement defensive tactics in relation to the Offer, (ii) Green Growth uncovers or its contemplated funding sources uncover or otherwise identify information suggesting that the business, affairs, prospects or assets of Aphria have been impaired or uncovers or otherwise identifies other undisclosed material adverse information concerning Aphria or (iii) Aphria determines to engage with Green Growth to negotiate the terms of a combination transaction and Aphria and Green Growth determine to undertake that transaction utilizing a structure other than a take-over bid such as a plan of arrangement. Accordingly, there can be no assurance that the Offer will be made or that the final terms of the Offer will be as set out in this news release. In addition, the contemplated consummation of a concurrent brokered financing of C$300 million, at a price per share of C$7.00, and the contemplated backstop commitment in that regard, are subject to a variety of contingencies and conditions, including satisfactory completion of customary due diligence as to both Aphria and Green Growth, agreement on mutually agreeable definitive documentation, and other customary undertakings and conditions. No binding commitment of any kind has yet been made in this regard, and readers should not assume any such commitment will be made unless and until reflected in a binding instrument agreed by the contemplated funding sources, which cannot and should not be assumed or assured.
The Offer will be undertaken in accordance with National Instrument 62-104 - Take-Over Bids and Issuer Bids and will be subject to a number of customary conditions, including: (i) there being deposited under the Offer, and not withdrawn, at least 66 2/3% of the outstanding Aphria Shares (calculated on a fully diluted basis), excluding Aphria Shares held by Green Growth; (ii) receipt of all governmental, regulatory, stock exchange and third party approvals that Green Growth considers necessary or desirable in connection with the Offer; (iii) there being no legal prohibition against Green Growth making the Offer or taking up and paying for the Aphria Shares; (iv) Aphria not having adopted or implemented a shareholder rights plan, disposed of any assets, incurred any material debts, implemented any changes in its capital structure or otherwise implemented or attempted to implement a defensive tactic; (v) no material adverse change having occurred in the business, affairs, prospects or assets of Aphria; (v) Green Growth not becoming aware of Aphria having made any untrue statement of a material fact or omitting to state a material fact that is required to be made to any securities regulatory authority; (vi) approval by the shareholders of Green Growth in accordance with the policies of the Canadian Securities Exchange; and (vii) the statutory minimum condition that 50% of the Aphria Shares having been tendered to the Offer, excluding Aphria Shares held by or over which control is exercised by Green Growth (which cannot be waived). If the Offer proceeds, Green Growth expects to call during the first quarter of 2019 a meeting of its shareholders to consider a resolution to approve the issuance of the Green Growth Shares in connection with the Offer. Green Growth expects the Offer, when made, will remain open for an acceptance period of at least 105 days from the date of mailing its take-over bid circular. It is within the power of the Board of Directors of Aphria to significantly shorten this minimum bid period, allowing shareholders to receive the benefits of Green Growth's offer in only 35 days. Shareholders of the Company are encouraged to contact Aphria and to urge management and the Board to allow Green Growth's takeover bid to proceed in the minimum time frame allowed.
Advisors - Green Growth Brands has retained Canaccord Genuity as its financial advisor, Norton Rose Fulbright Canada LLP as its legal advisor, and Kingsdale Advisors as its strategic shareholder and communications advisor and depositary.
About Green Growth Brands - Green Growth brands expects to dominate the cannabis and CBD market with a portfolio of emotion-driven brands that people love. Led by renowned retailer Peter Horvath, the GGB team is full of retail renegades with decades of experience building successful brands. Join the movement at GreenGrowthBrands.com.
Aphria Inc. (NYSE: APHA) is a leading global cannabis company driven by an unrelenting commitment to our people, product quality and innovation. The company recently announced its proposed acquisition of CC Pharma GmbH, a leading distributor of pharmaceutical products to more than 13,000 pharmacies in Germany. The transaction, when closed, will strengthen the Company's end-to-end medical cannabis operations and infrastructure in Germany, a key market in Aphria's international expansion. Earlier this year, the Company, through its wholly-owned subsidiary Aphria Deutschland, acquired a 25.1% interest in Berlin-based Schöneberg Hospital, providing access to both doctors and patients to support education about the benefits of medical cannabinoids. "This acquisition strengthens our foothold in Germany, one of the most highly sought-after medical cannabis markets in the world," said Vic Neufeld, Chief Executive Officer of Aphria. "CC Pharma is cash-flow positive and has significant experience with regulatory requirements and international logistics. It will be a strong addition to Aphria's presence in Germany, providing deeper access to the important pharmacist channel and advancing our ambitious global growth strategy."
Tilray, Inc. (NASDAQ: TLRY) is a pioneer in the research, cultivation, production and distribution of medical cannabis and cannabinoids currently serving tens of thousands of patients in twelve countries spanning five continents. The company recently announced that after completing an acquisition of its existing import and distribution partner Alef Biotechnology SpA, the Company has officially relaunched as Tilray Latin America SpA, a wholly-owned subsidiary of Tilray. Tilray Latin America will further strengthen Tilray's position as a global leader in the medical cannabis market. Tilray currently has medical cannabis products available in twelve countries and operates globally through its wholly-owned subsidiaries in Australia & New Zealand, Canada, Germany, and Portugal.
Canopy Growth Corporation (NYSE: CGC) announced earlier this month that it has entered into a multi-year extraction agreement with Valens GroWorks Corp, a licensed, vertically integrated provider of cannabis products and services focused on various proprietary extraction methodologies, distillation, cannabinoid isolation and purification. Under the terms of the multi-year agreement, Valens will utilize their proprietary technology and methodologies to process the Company's whole flower and trim into high-grade cannabis resin. Canopy Growth expects the first shipment of product for extraction will occur before the end of December 2018. Valens previously joined Canopy Growth's CraftGrow program in October 2017. "Diversifying our extraction supply capabilities with Valens, a company positioning itself as a specialized extractor, increases our ability to supply a consistent, high-quality inventory of oils for products such as Softgels," commented Mark Zekulin, President & Co-CEO, Canopy Growth. "We're also excited to see Valens progress in its licensing capabilities so that it can add its products to our CraftGrow program, increasing the diversity of high-quality cannabis products available for medical and recreational customers in 2019."
Aurora Cannabis Inc. (NYSE: ACB), headquartered in Edmonton, Alberta, is one of the world's largest and leading cannabis companies. Aurora Cannabis Inc. recently announced that it has reached an agreement with Shopify Inc., one of the world's leading multi-channel, online commerce companies, to leverage the Shopify platform as Aurora's ecommerce engine for medical and recreational cannabis distribution globally. Working closely with Aurora Cannabis' industry-leading software engineering team, Shopify will assist in transitioning Aurora's current ecommerce site to a new, Shopify-developed platform, improving the customer experience for Aurora's current medical and future adult consumer use customers. One of the key benefits of the Shopify platform is its rapid and seamless scalability as Aurora executes on its domestic and international expansion strategy. "Selecting Shopify allows Aurora to bring a world-class ecommerce solution to our patients and future adult consumer use customers," said Darryl Vleeming, Chief Investment Officer of Aurora Cannabis Inc. "Shopify's unique, industry leading platform provides a safe, secure and flexible ecommerce site that we can build on as we execute our global growth initiatives and enter new markets."
Subscribe Now! Watch us report LIVE https://www.youtube.com/FinancialBuzzMedia
Follow us on Twitter for real time Financial News Updates: https://twitter.com/financialbuzz
Follow and talk to us on Instagram: https://www.instagram.com/financialbuzz
Facebook Like Us to receive live feeds: https://www.facebook.com/Financialbuzz/
About FinancialBuzz.com
FinancialBuzz.com, a leading financial news informational web portal designed to provide the latest trends in Market News, Investing News, Personal Finance, Politics, Entertainment, in-depth broadcasts on Stock News, Market Analysis and Company Interviews. A pioneer in the financially driven digital space, video production and integration of social media, FinancialBuzz.com creates 100% unique original content. FinancialBuzz.com also provides financial news PR dissemination, branding, marketing and advertising for third parties for corporate news and original content through our unique media platform that includes Newswire Delivery, Digital Advertising, Social Media Relations, Video Production, Broadcasting, and Financial Publications.
Please Note: FinancialBuzz.com is not a financial advisory or advisor, investment advisor or broker-dealer and do not undertake any activities that would require such registration. The information provided on http://www.FinancialBuzz.com (the 'Site') is either original financial news or paid advertisements provided [exclusively] by our affiliates (sponsored content), FinancialBuzz.com, a financial news media and marketing firm enters into media buys or service agreements with the companies which are the subject to the articles posted on the Site or other editorials for advertising such companies. We are not an independent news media provider and therefore do not represent or warrant that the information posted on the Site is accurate, unbiased or complete. FinancialBuzz.com receives fees for producing and presenting high quality and sophisticated content on FinancialBuzz.com along with other financial news PR media services. FinancialBuzz.com does not offer any personal opinions, recommendations or bias commentary as we purely incorporate public market information along with financial and corporate news. FinancialBuzz.com only aggregates or regurgitates financial or corporate news through our unique financial newswire and media platform. For green growth brands, financial and corporate news dissemination, FinancialBuzz.com has not been compensated so far. Our fees may be either a flat cash sum or negotiated number of securities of the companies featured on this editorial or site, or a combination thereof. The securities are commonly paid in segments, of which a portion is received upon engagement and the balance is paid on or near the conclusion of the engagement. FinancialBuzz.com will always disclose any compensation in securities or cash payments for financial news PR advertising. FinancialBuzz.com does not undertake to update any of the information on the editorial or Site or continue to post information about any companies the information contained herein is not intended to be used as the basis for investment decisions and should not be considered as investment advice or a recommendation. The information contained herein is not an offer or solicitation to buy, hold or sell any security. FinancialBuzz.com, members and affiliates are not responsible for any gains or losses that result from the opinions expressed on this editorial or Site, company profiles, quotations or in other materials or presentations that it publishes electronically or in print. Investors accept full responsibility for any and all of their investment decisions based on their own independent research and evaluation of their own investment goals, risk tolerance, and financial condition. FinancialBuzz.com. By accessing this editorial and website and any pages thereof, you agree to be bound by the Terms of Use and Privacy Policy, as may be amended from time to time. None of the content issued by FinancialBuzz.com constitutes a recommendation for any investor to purchase, hold or sell any particular security, pursue a particular investment strategy or that any security is suitable for any investor. This publication is provided by FinancialBuzz.com. Each investor is solely responsible for determining whether a particular security or investment strategy is suitable based on their objectives, other securities holdings, financial situation needs, and tax status. You agree to consult with your investment advisor, tax and legal consultant before making any investment decisions. We make no representations as to the completeness, accuracy or timeless of the material provided. All materials are subject to change without notice. Information is obtained from sources believed to be reliable, but its accuracy and completeness are not guaranteed. For our full disclaimer, disclosure and Terms of Use, please visit: http://www.financialbuzz.com .
For further information:
Media Contact: [email protected] , +1-877-601-1879
SOURCE FinancialBuzz.com
Share this article