Green Growth’s offer, made last month, represents a 23% discount to Aphria’s share price, based on the 20-day volume-weighted average price of Green Growth stock immediately before its bid was announced, Aphria said Wednesday in a statement. Aphria’s Canadian shares have gained more than 70% since Green Growth first signaled its intention to launch the offer in late December.

“Regardless of their brazen attempts to suggest otherwise, GGB is asking Aphria shareholders to accept a substantial discount on their shares,” Aphria Chairman Irwin Simon said in the statement.

He indicated that Aphria’s board would be more open to a cash bid than the all-stock offer from Green Growth.

“There’s a big difference between cash and someone else’s paper,” Simon said in an interview Wednesday on BNN Bloomberg TV.

Columbus, Ohio-based Green Growth formally launched the unsolicited offer in January following an attack on Aphria by short sellers. Based on Tuesday’s closing prices, the offer is worth C$2.3 billion ($1.74 billion), well below Aphria’s current market value of C$3.3 billion. The gap between Green Growth’s offer and Aphria’s current share price is the second widest of the 101 current deals tracked by Bloomberg.

Aphria shares fell 7.4% and Green Growth was down 6.5% at 3:30 p.m. in Toronto amid a broader decline in pot stocks.

Cross Border

Green Growth is flexible and open to negotiations, Green Growth Chief Executive Officer Peter Horvath said in a phone interview in late January. A spokesman said Wednesday that the company will comment on Aphria’s response “in due course.”

If the bid succeeds, it would mark the first large cross-border takeover in the cannabis industry. Canada legalized recreational pot in October, and several U.S. states allow medical or recreational use of the drug, but it remains banned at the federal level.

Under the terms of the offer, Aphria investors have until May 9 to tender their shares.

The Canadian company said a deal would “destroy value” for shareholders by reducing interest from potential strategic partners. It would result in Aphria shareholders giving Green Growth investors a 36% interest “in exchange for shares in a company with limited operations or other experience in the cannabis industry,” according to the statement.

Timed to ‘Exploit’

It would also force the combined company to immediately delist from the Toronto Stock Exchange and the New York Stock Exchange, which don’t allow listings from cannabis companies with U.S. operations, reducing liquidity for Aphria shareholders, the company said.

“GGB clearly timed their offer to exploit recent lows for Aphria and cannabis stocks overall, with the goal of transferring value to the insiders who control GGB at the expense of Aphria shareholders,” Simon said in the statement.

Green Growth also plans to complete a third-party equity financing of C$300 million at C$7 a share to fund the deal. Its shares were trading at C$5.49 on Wednesday.

Its largest shareholder, backed by the retail fortune of Ohio’s Schottenstein family, has agreed to purchase up to C$150 million shares to backstop the financing, but Aphria said there’s no guarantee it will be able to complete it.

Scotiabank, which is acting as financial adviser to Aphria, provided a written opinion that the bid is inadequate, the company said.