The Canadian cannabis producer Aphria plunges after missing on earnings and speeding up the expiration of Green Growth Brands' hostile takeover bid
- Aphria plunged as much as 15% Monday after missing on earnings and agreeing to accelerate the expiration of the hostile takeover bid by Green Growth Brands.
- The company also reported a $50 million non-cash impairment to its Latin American assets.
- Watch Aphria trade live.
Aphria posted a bigger than expected third-quarter loss on Monday, sending shares down as much as 15%. In addition, the company also reported a $50 million goodwill impairment on its Latin American assets and announced that it had reached an agreement with Green Growth Brands to accelerate the expiry of its hostile takeover bid. The acceleration effectively ends the takeover attempt.
The Canadian cannabis producer reported a loss of $0.20 a share - well below the $0.05 loss that Wall Street analyst surveyed by Bloomberg were expecting. In total, Aphria's loss was $108 million. Meanwhile, revenue soared by more than 600% from the previous year, but missed the Bloomberg consensus of $83 million by nearly 12%.
The report included a $50 million non-cash charge for the impairment of goodwill for its Latin American assets, which resulted from a review by the Ontario Securities Commission.
"Aphria's earnings show a quarterly loss exceeding $100 million, negative margins, decreased production volume, regulatory scrutiny and a large write off for its Latin American acquisition, which we think will be the first of many," commented Gabriel Grego of Quintessential Capital Management. Quintessential had previously announced a short position on the company.
Grego added: "As our research showed, the company's actual performance was not what they were telling the market. We respect the new management team, which is undertaking the challenging job of fixing the dire situation left behind by their predecessors."
Green Growth, a US-based marijuana company, announced in December an unsolicited bid to acquire all of Aphria's outstanding common shares through an all-stock deal. Aphria advised shareholders to reject the bid, stating the Green Growth proposal had significantly undervalued the company. The agreement to accelerate the expiry of the offer was mutual.
"We are bringing our offer to an end on good terms with Aphria and are excited to turn our focus to our CBD personal care and retail cannabis businesses," said Green Growth Brand CEO Peter Horvath.
Rival cannabis producer also dropped following the report, with Aurora Cannabis and Canopy Growth both down more than 3%. Tilray was down nearly 6%.
Aphria shares were up nearly 50% this year.
