Xanthic Biopharma Inc., doing business as Green Growth Brands Ltd., plans to make an offer to buy Canadian cannabis company Aphria Inc. at a valuation of about C$2.8 billion.
Under the proposed offer, Toronto-based Green Growth would give Aphria shareholders 1.5714 of Green Growth common shares for each Aphria share that it does not already own.
The intended offer values the Green Growth stock at C$7 per share and represents a premium of 45.5% over Aphria's closing price on the Toronto Stock Exchange on Dec. 24.
Green Growth said the merged entity will become the largest U.S. cannabis operator by market capitalization and the only North American cannabis operator after the combination of Aphria's low-cost production capacity with Green Growth's retail network.
The company also plans to raise C$300 million at a valuation of C$7 per share to fund the transaction, with certain shareholders expected to backstop the financing.
Green Growth said it had approached Aphria's board offering a very short exclusivity period and a full go-shop provision to look for other suitors.
In addition, Green Growth offered to invest C$50 million in equity at an Aphria per share value of C$11 in case of support from Aphria's board.
The company, which has already acquired less than 5% of Aphria's outstanding stock, said it has support for the offer from shareholders owning about 10% of Aphria's outstanding stock.
Separately, Aphria said its director and CEO Vic Neufeld will step down as independent chair of the board, to be replaced by Irwin Simon, effective Dec. 27.
Simon serves as a lead director at marketing and communications services provider MDC Partners Inc. and is also present on the board of the bookseller Barnes & Noble Inc.