Istock

Shares of Aphria Inc. (APHA   fell 9.4% to close at $9.70 in trading Wednesday after the Canadian cannabis company officially rejected a hostile takeover bid by Green Growth Brands Inc. (GGBXF , saying that the bid significantly undervalued the company. 

Aphria's board unanimously recommended that shareholders reject the hostile bid on the grounds that the deal undervalues the company and the takeover would result in delisting from the Toronto Stock Exchange and New York Stock Exchange.

The board also noted that Aphria shareholders would be giving GGB shareholders a 36% interest in Aphria in exchange for shares in a company "with limited operations or other experience in the cannabis experience." 

Green Growth first made an offer for Aphria in December and said in January that it would make a second, all-stock takeover bid that valued the company at $1.76 billion. Aphria has a market cap of about $2.7 billion. 

"Regardless of their brazen attempts to suggest otherwise, GGB is asking Aphria shareholders to accept a substantial discount on their shares, as well as delisting from both the TSX and NYSE, resulting in a vast dilution of their ownership in Aphria. In return GGB offers shares in an illiquid company with limited operating history, minimal assets and no track record in the cannabis industry," said Irwin D. Simon, Aphria's independent board chairman.