In the days earlier this year, when it became clear from a short seller report that Aphria (APHA.T) had bought into foreign assets that were largely ‘early stage’ if you were being charitable, and ‘fake’ if you weren’t, the company went through four stages of denial.

1. They feigned outrage and insisted they’d seek legal recourse
2. They shifted from outrage and said they were working on a rebuttal
3. The rebuttal took months to show up as they called upon an independent board committee to investigate
4. The CEO shifted sideways and announced a hostile takeover bid from a company he had personal involvement with which, I mean, obviously they’d have to deal with before they could get into that whole other thing

The takeover bid was bullshit from the outset, a fugazi intended to make investors holding big losses happier, shift the market the other way, and give cover to the company from being held to its promise to come clean.

https://equity.guru/2018/12/04/tepid-aphria-apha-t-response-short-report-accusations-sees-stock-hammered/

As noted by Marketwatch’s Jeremy Ownes and Max Cherney, the deal never made sense.

On Thursday evening, Green Growth Brands Ltd. GGBXF, publicly announced an all-stock bid for Aphria, that it said would value the Canadian pot producer at more than $2 billion.

Getting to that $2 billion figure requires some fancy math: Green Growth values its own shares at C$7 apiece, even though they only topped C$5 a share on the Canadian Securities Exchange for the first time Friday morning.

In addition:

Green Growth and Aphria have a pretty long, and friendly, history for any genuine hostility to have sprung up now. The major backer of Green Growth, the billionaire Schottenstein family, partnered with Aphria on a bid to run a medical-marijuana dispensary in the Schottensteins’ home state of Ohio in 2017. The two companies also reportedly share some players, such as Aphria board member and former Green Growth board member Shawn Dym,

Further:

Aphria also may have given a clue about what was found in an internal investigation by removing Chief Executive Vic Neufeld — a major target of the short seller’s theory — from the chairman role in a little-noticed announcement that hit directly after Green Growth publicly announced its bid, timing that could lead one to believe that the two actions were coordinated to lessen the impact of the second. Neufeld sits on the advisory board of Green Acre Capital, which took more than C$30 million from Aphria in the fiscal first quarter and is an investor in Green Growth, through one of its funds.

Neufeld is gone now, and Aphria has regained a lot of what it lost in the gnarly old days, sitting at $10.30 now, making GGB’s offer laughable.

Even more laughable than it initially was. 

APHRIA ANNOUNCES EXPIRY AND TERMINATION OF GREEN GROWTH BRANDS TAKE-OVER BID

The previously announced takeover bid by Green Growth Brands Inc. has failed to meet the statutory minimum tender condition, has now expired and is terminated. As previously announced on April 15, 2019, Aphria Inc. entered into a definitive agreement with GGB to accelerate the expiry date of the offer to April 25, 2019, as well as to terminate certain arrangements with GA Opportunities Corp. (GAOC) for consideration of $89.0-million payable on future dates as set out in the April 15 press release.

This closes one of the hairier chapters of the Canadian weed space, which has seen other companies that have accrued questionable assets overseas suddenly look a little guilty.

Namaste Technologies (N.V) ditched CEO Sean ‘Captain ManBun’ Dollinger when they took a look under the hood around the time Aphria was being hung out to dry. Wayland Group (WAYL.C) went on a share-heavy buying spree in late 2018, only to ditch a 49% stake in what they acquired for shares in a smaller company, ICC International (WRLD.U – formerly Kaneh Bhosm) months later as Aphria was being bodied.

Both Wayland and Namaste have seen board shuffles in the time since, as well as dropping stock prices and, both are late with financials that are pushing the bounds of propriety.

Today, Namaste announced it was shutting down some of its international assets due to banking concerns. ICC just announced a new CEO. WAYL put its VP of legal counsel into the President’s seat. And Aphria is now putting expansive funds into some of the assets they acquired, seeking to turn them into something closer to what they were advertised as.

And thus ends a chapter in Canada’s public markets history that it would probably rather move past. At least, we hope it does.

— Chris Parry

FULL DISCLOSURE: No commercial arrangement with any company mentioned above.