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Cannabis producer Aphria says U.S. company’s hostile takeover bid is too low

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Aphria Inc. said it’s skeptical that an Ohio-based company’s hostile takeover offer would be a good deal for the Canadian cannabis company’s shareholders, a view shared by at least one pot sector analyst.

Aphria said before markets opened Friday that the actual value of the shares it’s being offered is substantially lower than the announced offer price and undervalues the Leamington, Ont.-based producer of legal cannabis.

In afternoon trading Friday, shares of Xanthic Biopharma Inc., which does business as Green Growth Brands, were at $5.16, up 18 cents, at the Canadian Securities Exchange. At that price, its offer of 1.5714 Xanthic shares per Aphria share would value the Canadian company at about $8.10 per share.

The newly installed chairman of Aphria’s board said in a statement Friday that “their proposal falls short of rewarding our shareholders for participating in such a transaction.”

“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,” said Irwin Simon, who was named chairman of the Aphria board after Green Growth Brands announced its offer Thursday afternoon.

Vic Neufeld, who had been chairman, will remain Aphria’s chief executive officer and a director on Aphria’s board.

Aphria Inc. shares shot up as much as 14 per cent early Friday before giving up some of their initial gains. Its shares were off their early highs at $8.50 at 3:20 p.m. at the Toronto Stock Exchange, up 93 cents from Thursday’s close at $7.57.

Green Growth Brands made its offer conditional on completing a financing deal that values its shares at $7 each. At that price, its offer would be worth $11 per Aphria share.

Peter Horvath, CEO of Green Growth, said Friday that his company has received considerable interest from investors, so he thinks it will be able to raise $300 million based on a valuation of $7 per Xanthic share.

“The question is: will shareholders agree at an $11 valuation?” Horvath said.

“Clearly the board … has said that is too low but given the uncertainty that there’s been around the performance of the stock of late, we picked a number that we think represents an acceptable premium at 45 per cent.”

Shares of publicly traded companies selling cannabis have been volatile over the last few months. (Graeme Roy/Canadian Press)

However, a research note issued Friday by GMP Securities analyst Martin Landry says an offer based on Green Growth’s proposal “looks ambitious” given that it’s a new company with a market value that’s much lower than Aphria’s.

“As it stands, GGB’s potential offer is not attractive given its highly conditional nature and given it lacks a takeover premium,” Landry said.

He also said the appointment of Simon as chairman of Aphria’s board is a good sign because of his track record as an entrepreneur and experience in the packaged food industry through The Hain Celestial Group.

“He is a strong addition to Aphria’s BOD [board of directors] and a great step in the right direction to improve governance,” Landry wrote.

GMP has lowered its price estimate for Aphria to $14 as a result of allegations, which are under review and haven’t been proven, that a proposed acquisition target has worthless assets.

Cannabis companies’ shares volatile

Shares of most publicly traded cannabis companies have been volatile over the last few months, including those of Aphria Inc., after its plan to acquire LATAM Holdings came under fire in early December.

In early December, short-sellers Quintessential Capital Management and Hindenburg Research alleged that the company’s acquisition of the LATAM Holdings assets in Colombia, Argentina and Jamaica totalling $280 million from Scythian Biosciences were “largely worthless.”

Gabriel Grego, of Quintessential Capital Management, argued Aphria had spent $700 million buying up subsidiaries which don’t add any value to the company and did little besides enriching insiders at the companies that were taken over.

Short-seller Hindenberg levelled fresh criticism Friday, suggesting the proposed takeover may not be hostile at all.

It said Green Growth Brands’ second largest shareholder is a fund sponsored by Green Acre Capital, “a firm that lists none other than Aphria CEO Vic Neufeld on its board of advisors.”

“Aphria has invested directly in the fund and therefore already owns a significant stake in GGB,” the statement said.

Additionally, its statement said Green Growth recently listed a current Aphria board member on its own board of directors, and that other recent Green Growth directors have “obvious affiliations with Aphria.”

Neufeld, who had been chairman through the controversy, will remain Aphria’s chief executive officer and a director on Aphria’s board.

Takeover offers that are made directly to shareholders without approval of the target company’s board of directors are considered to be hostile bid. But Green Growth’s Horvath said Friday that his company would prefer a friendly deal because the proposal hinges on the expertise that each company brings to the table.

“Aphria brings proven cultivation experience and, from what we’ve seen, they’re bringing that in a highly sophisticated and technological way to cannabis,” Horvath said in an interview with The Canadian Press.

Horvath also said in a statement Thursday that an acquisition of Aphria would increase value for shareholders of both companies.

“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,” he said.

But Hindenberg says that’s not the case.

Differing views

Its statement said Green Growth was just formed this year, has almost no revenue or tangible assets, and has limited operations. “Despite this, its newly listed, thinly traded stock has spiked to a market cap of $890 million on average daily dollar volume of only $1.3 million.”

Hindenberg called Green Growth “largely a worthless entity with numerous signs of Aphria related-party influence.”

“This entire proposed deal strikes us as merely an epic next step of Aphria’s brazen shell game,” the statement said.

Aphria, which has its main operations in the southwestern Ontario community of Leamington, said it has established an independent committee of directors to consider any formal offers it receives.

In the meantime, Aphria said it would continue to execute its current corporate strategy.

“It’s business as usual for us right now,” said John Jacobs Jr., Aphria’s labour director.

Requests for further comment from Aphria’s executive team were declined.

Class-action bid filed

Earlier this month, a Toronto law firm said it filed a proposed class action against Aphria and its chief executive and financial officers after the company was targeted by short-sellers.

Koskie Minsky LLP alleges Aphria made false and misleading statements related to its acquisition of LATAM Holdings, a claim that has not been tested in court.

The proposed class action came after the short-sellers’ allegations.

Aphria said on Dec. 6 that it had set up a special committee of independent directors to review the LATAM acquisition.

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Couple from Toronto buys dream home in Mushaboom

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MUSHABOOM – A couple who lived and raised a family in downtown Toronto developed a five-year plan in 2015 to purchase their dream home.

In September they moved into the home – located on Malagash Island in Mushaboom on Nova Scotia’s stunning Eastern Shore – that met and exceeded their best dreams for their retirement.

The Camerons, Bruce and Tanya, decided in 2019 they would explore the Maritimes to see what real estate was available to become their potential retirement home. In the spring of 2020, during a global pandemic, the real estate boom hit their city, and they were hearing the same for Nova Scotia. Our province was their first-choice for attaining their desire for an entirely different lifestyle – away from the busyness of the city.

“We had $300,000 to $350,000 as a home value in mind to buy. Our semi-detached located off Danforth in Toronto was priced at $850,000. We wanted to come out ahead, so we would be secure in retirement,” Tanya said.

Their century-old home had prime location near the subway and GO Transit Line for a great 13-minute commute downtown.

“We enjoyed our community,” explains Bruce “… we had great neighbours, young children around and street parties – lots of social activity.”

Bruce says, “Our agent suggested a starting quote of $899,000. We did not do any renovations and only some staging. Fifty couples went through and we received four significant offers. Six days later we sold – with zero conditions – and a price of over a million dollars. We just requested a closing of September 2020 to get the kids off to school – which we got.”

The couple got more than they had anticipated.

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Rabobank Announces Leadership Changes in U.S., Canadian Offices

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NEW YORK, Dec. 16, 2020 /PRNewswire/ — Rabobank, the leading global food and agribusiness bank, has appointed two of its top executives, Tamira Treffers-Herrera and Robert Sinescu, to become Co-Heads of North American Client Coverage, positioning the Bank for future growth in the region.

Treffers-Herrera has also assumed the role of Vice Chairperson and Head of the Atlanta office, where she additionally oversees Rabobank Mexico, which is led by Eduardo Palacios. Sinescu is the Head of the Chicago office, and also oversees Rabobank Canada, led by Marc Drouin, who was recently appointed as Canada’s General Manager.

Treffers-Herrera and Sinescu report to David Bassett, Head of Wholesale Banking North America, the Bank’s corporate and investment banking business for the region based in New York.

“Both Tamira and Robert have a demonstrated history of strong leadership, operational excellence and passion for our clients,” Bassett said. “Their broad experience and deep sector expertise will be invaluable in delivering dynamic results for clients while accelerating our growth trajectory in North America.”

Each office will have an even greater focus on key Food & Agribusiness sectors and clients: The Chicago office will drive growth in sectors including Dairy, Farm Inputs and Grains & Oilseeds, which are also key areas of focus for the Canada office. The Atlanta office will focus heavily on sectors such as Animal Protein, Beverages, Sugar, and Supply Chains, which are important sectors in Mexico as well.

“Rabobank is fully committed to our clients throughout North America, and we believe our new sector-focused coverage will improve our ability to provide knowledge-based, value-added solutions that benefit our clients,” Bassett said.

Treffers-Herrera was most recently based in London as CEO of Rabobank’s European Region from 2016-2020, where she took the organization through Brexit. Prior to that, she worked in the Atlanta office from 2002-2016. During her tenure in Atlanta, Treffers-Herrera served as Global Sector Head – Consumer Food & Beverages, and prior to that she was a senior banker for a portfolio of large beverage and consumer foods clients. She holds a Bachelor of Arts degree from the University of Kentucky, a Master of Arts from the Patterson School of Diplomacy and International Commerce and has studied at The University of Chicago Booth School of Business and Harvard Business School.

Sinescu has been with Rabobank for over 21 years and was previously General Manager of Rabobank Canada, where he oversaw all operations, business development, commercial strategy and relationships with regulators. In addition, he continues to serve as CEO of Rabo Securities Canada Inc. Prior to Canada, he was a senior banker, Head of Corporate Banking, European Sector Head for Sugar, and a member of the Management Team for Rabobank France. He holds a Bachelor of Science in Business from the Bucharest School of Business, a Master of Business Administration & Management and a Master of Science in Banking and Corporate Finance from Sorbonne University in Paris, and has studied at Brown University.

Drouin has worked with Rabobank’s Canadian team for more than nine years and most recently served as a senior banker, Head of Rabobank Canada’s AgVendor Program and a member of Rabobank Canada’s Management Team. He brings extensive wholesale banking experience within the Dairy, G&O, CPG and Supply Chain sectors. Drouin holds a Bachelor of Arts degree from McGill University and a Master of Business Administration in International Finance, Marketing and Management from the Schulich School of Business at York University.

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Greybrook Realty Partners & Marlin Spring Brand Jointly Owned Asset Manager – Greyspring Apartments

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TORONTO, Dec. 14, 2020 (GLOBE NEWSWIRE) — Greybrook Realty Partners and Marlin Spring are pleased to announce the new branding of their jointly owned investment and asset management firm, Greyspring Apartments. With a portfolio of more than 2,000 units and CAD$375 million in assets under management, Greyspring Apartments is focused on the acquisition and repositioning of multi-family assets throughout Canada.

The new name and branding is an important step in Greyspring’s evolution as an independent operating business. Formed in 2018 by long standing-partners Marlin Spring and Greybrook Realty Partners, Greyspring Apartments was established with the goal of building a leading asset management firm with a robust portfolio of residential rental real estate assets in primary and secondary markets across Canada.

Greyspring’s talented team of real estate, asset management and finance professionals is overseen and guided by the Management Board, whose members include Benjamin Bakst, CEO, Marlin Spring; Elliot Kazarnovksy, CFO, Marlin Spring; Sasha Cucuz, CEO, Greybrook Securities Inc.; Peter Politis, CEO, Greybrook Realty Partners; Chris Salapoutis, President & COO, Greybrook Realty Partners; Ashi Mathur, President, Marlin Spring; and Karl Brady. In addition to his role on the Management Board, Karl Brady leads Greyspring Apartments as its President. 

“We are pleased to announce the official name and branding of a business we formed with our partners at Marlin Spring a few years ago,” said Peter Politis, CEO, Greybrook Realty Partners. “Greyspring has been diligently focused on the execution of strategic value-add programs across its portfolio that are improving the quality of housing for tenants and overall asset values. For Greybrook investors, expanding from our core business in real estate development to the value-add space through Greyspring, has allowed us to provide our clients with investment opportunities that diversify their real estate investment portfolios.”

“Marlin Spring and Greybrook have partnered on many residential real estate projects in recent years,” said Benjamin Bakst, CEO and Cofounder, Marlin Spring. “To a great extent, Greyspring illustrates our approach to partnerships. We believe in, and strive for, responsible growth through deepening our relationships with our trusted partners. With Greyspring, we’ve formalized our focus on providing better and more affordable living experiences for Canadians. This vision aligns with our mission to deliver exceptional real estate value to all our stakeholders with an uncompromising adherence to our core values.”

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