Analyst Dmitry Zaytsev discusses the recent official Aphria Inc (TSE:APHA) (NYSE:APHA) (FRA:10E) takeover bid tabled by Green Growth Brands Ltd (CNSX:GGB) (OTCMKTS:GGBXF). Zaytsev has concerns about a number of aspects of the GGB offer. Zaytsev takes issue with GGB’s financing history, especially its agreement to pay All JS Greenspace LLC, which is helping to finance the capital raise to acquire Aphria, a commitment fee of $7.5 million if the deal does not go through. Most troubling for Zaytsev is the lack of transparency about the existing relationships between the two companies. He reveals that an Aphria subsidiary, GA Opportunities, is one of the largest shareholders in GGB, holding a 10 percent stake. GA Opportunities has partnered with All JS Greenspace LLC, a Schottenstein family holding that is financing the takeover bid, to create Schottenstein Aphria LLC. In addition, All J sold a pharma shell into Schottenstein Aphria LLC, which then used an RTO to launch Green Growth Brands. Zaytsev concludes the proposed deal will result in an automatic dilution for Aphria shareholders.
Transcript:
James West: Dmitry Zaytsev is here. Dmitry, welcome back.
Dmitry Zaytsev: Nice to see you, James.
James West: Nice to see you, too. That’s so weird, they just walk you on the set while I’m talking to Margot. I can’t say hello, I can’t shake your hand –
Dmitry Zaytsev: Tight schedule today.
James West: Tight schedule, is that what it is? I guess, yes. So we were going to talk about you’ve been following very closely the potential merger I think we’re going to restrain the conversation to of the potential merger between Aphria and Green Growth Brands, acquisition of Aphria by Green Growth brands, in and all-spot deal, and so they’ve made an announcement today where Aphria is positioning itself as, at least management is advising its shareholders not to do anything, and Green Growth Brands has more or less made official its offer, which remains inadequate relative to what was said by Aphria management previously. What is your take on all of this?
Dmitry Zaytsev: Yeah, so looking through all the filings, as you know, I’ve been following a lot of these