Cannabis producer Aphria Inc. responded to the C$2.8 billion takeover bid it received from Xanthic Biopharma Inc., which does business as Green Growth Brands, saying the unsolicited offer undervalues the company.

Leamington, Ontario-based Aphria said the offer is about 23% below the company's average share price based on a 20-day period.

On Dec. 27, Toronto-based cannabis producer and retailer Green Growth made an offer under which it would give Aphria shareholders 1.5714 of Green Growth common shares for each Aphria share that it does not already own. The intended offer valued the Green Growth stock at C$7 per share and represented a premium of 45.5% over Aphria's closing price on the Toronto Stock Exchange on Dec. 24.

Green Growth said the merged entity would become the largest U.S. cannabis operator by market capitalization and the only North American cannabis operator after the combination of Aphria's production capacity with Green Growth's retail network.

Aphria said in its Dec. 28 press release that Green Growth was attempting to acquire it through a highly conditional offer at a significant discount and added that the offer is based on a hypothetical valuation of Green Growth's own shares, with no relation to the current price.

"[The] proposed offer is quite risky given [Green Growth Brands'] 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," Aphria Chairman Irwin Simon said in a news release.

Aphria's board has established an independent committee of directors to consider the proposal and any formal offer received.