It's a brand new start to a brand new year, and unfortunately for Aphria Inc (TSX:APHA) (NYSE:APHA), the start is more than likely not how the company means to go on. APHA stock is down almost 10% at the time of writing. This is due to an uncertain merger but also to some serious claims made against the company.
What a way to begin the new year. Let's have a look.
APHA Stock: Rocked By Claims
Firstly, those claims!
Aphria Inc has been accused by a short seller of being a part of a large network of reverse mergers and cannabis acquisitions that enrich company insiders at the behest of shareholders.
Specifically, the allegations claim that Aphria overpaid for foreign acquisitions in deals that profited insiders, including CEO Vic Neufeld.
The company has yet to address the claims, which only adds fuel to the fire.
But then suddenly, Neufeld was replaced as Aphria's chairman by Irwin Simon. There were no formal announcements made on this transition.
Raising eyebrows, investors are being savvy and putting pieces of the puzzle together themselves. APHA stock has paid the price.
Green Growth Brands (GGB) Potential Take Over
Last week, Green Growth Brands (CSE:GGB) made an offer to purchase all of the issued and outstanding common shares of Aphria.
The deal on offer wasn't what investors expected initially and APHA stock is now dropping, after being up at the end of last week.
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How Could this Affect Aphria?
The purported hostile takeover caused initial excitement for investors; APHA stock soared 12% last Friday. However, the gains didn't last long.
GGB offered $8 USD per share, which represented a 46% premium over Aphria's closing price on December 24th. However, that figure did not consider Aphria's average share price over the month of December. At $8 per share, Green Growth was offering a 23% lower-than-average price for APHA stock.
Aphria lists on the New York Stock Exchange (NYSE) and Toronto Stock Exchange (TSX). This prevents the company from conducting business in the US while marijuana remains illegal at the federal level. But because GGB has US operations, Aphria would have to delist from the NYSE and TSX if it is to be acquired by GGB.
GGB and APHA stock movement will depend on the outcome of this deal, along with the unfolding of the above-mentioned allegations. Keep a close eye on Aphria and GGB; the new year is starting with a bang!
Featured Image: Depositphotos/MastrVideo
