Aphria CEO ‘Absolutely’ Interested In CannTrust’s Pot Assets
(Bloomberg) -- Aphria Inc. is “absolutely” interested in acquiring pot assets from its beleaguered competitor CannTrust Holdings Inc., Chief Executive Officer Irwin Simon said in a phone interview.
“I think they have some great medical clients and they have some real interesting assets,” Simon said Friday. “As somebody that looks for opportunities all the time, it's something that absolutely we would be looking at.”
CannTrust put itself up for sale earlier this week after a regulatory breach erased more than C$500 million ($378 million) in market value and resulted in the firing of CEO Peter Aceto. The Joint Serious Offences Team -- an enforcement partnership between the Ontario Securities Commission, the Royal Canadian Mounted Police and the Ontario Provincial Police's anti-rackets branch -- is investigating, CannTrust disclosed Thursday. The shares have plunged more than 57% this year.
Aphria hasn't spoken to the special committee of CannTrust's board that initiated the sale process and will wait for it to finish its review of the breach, Simon said.
He added that Aphria is already attracting CannTrust's former medical patients after the company froze sales of its products. “We've seen a nice increase in our medical cannabis business,” he said.
Aphria, which only eight months ago was the subject of a short-seller report that erased half its market value in three days and resulted in the ouster of CEO Vic Neufeld, has posted a remarkable turnaround.
Its shares surged as much as 34% Friday, the most this year, after the company's fiscal fourth-quarter results beat expectations on virtually all metrics. Analysts were particularly impressed by the 85% quarter-over-quarter jump in net cannabis revenue after the company had previously guided to flat performance.
Simon said the results were a combination of better production results from the Aphria One facility in Leamington, Ontario, improved sales numbers and a focus on cost cutting.
“If you have more sales and you have good gross margins, a lot more's going to drop to the bottom line,” he said.
To contact the reporter on this story: Kristine Owram in Toronto at kowram@bloomberg.net
To contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, ;Jacqueline Thorpe at jthorpe23@bloomberg.net, Divya Balji
©2019 Bloomberg L.P.
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