TORONTO -- Aphria Inc. said it's skeptical that an Ohio-based company's hostile all-share takeover offer would be a good deal for the Canadian company's shareholders, a view shared by at least one pot sector analyst.

Aphria said before markets opened Friday that the actual value of the shares it's being offered is substantially lower than the announced offer price and undervalues the Leamington, Ont.-based producer of legal cannabis.

Shares of Xanthic Biopharma Inc. -- which does business as Green Growth Brands -- closed up 13 cents, or 2.61 per cent, at $5.11 on the Canadian Securities Exchange on Friday. At that price, its offer of 1.5714 Xanthic shares per Aphria share would value the Canadian company at about $8.03 per share.

The newly installed chairman of Aphria's board said in a statement Friday that "their proposal falls short of rewarding our shareholders for participating in such a transaction."

"Further, the proposed offer is quite risky given GGB's condition to complete a brokered financing at a price that is more than double the recent average of their share price, as a key term to the proposal," said Irwin Simon, who was named chairman of the Aphria board after Green Growth Brands announced its offer Thursday afternoon.

Aphria Inc. shares shot up as much as 14 per cent early Friday before giving up some of their initial gains, closing up 95 cents, or 12.55 per cent, at $8.52 on the Toronto Stock Exchange.

Green Growth Brands made its offer conditional on completing a financing deal that values its shares at $7 each. At that price, its offer would be worth $11 per Aphria share.

Peter Horvath, CEO of Green Growth, said Friday that his company has received considerable interest from investors, so he thinks it will be able to raise $300 million based on a valuation of $7 per Xanthic share.

"The question is: will shareholders agree at an $11 valuation?" Horvath asked.

"Clearly the board . . . has said that is too low but given the uncertainty that there's been around the performance of the stock of late, we picked a number that we think represents an acceptable premium at 45 per cent."

However, a research note issued Friday by GMP Securities analyst Martin Landry says an offer based on Green Growth's proposal "looks ambitious" given that it's a new company with a market value that's much lower than Aphria's.

"As it stands, GGB's potential offer is not attractive given its highly conditional nature and given it lacks a takeover premium," Landry added.

However, he also said the appointment of Simon as chairman of Aphria's board is a good sign because of his track record as an entrepreneur and experience in the packaged food industry through The Hain Celestial Group.

"He is a strong addition to Aphria's BOD and a great step in the right direction to improve governance," Landry wrote.

GMP has lowered its price estimate for Aphria to $14 as a result of allegations, which are under review and haven't been proven, that a proposed acquisition target has worthless assets.

Vic Neufeld, who had been chairman through the controversy that erupted on Dec. 4, will remain Aphria's chief executive officer and a director on Aphria's board.

Takeover offers that are made directly to shareholders without approval of the target company's board of directors are considered to be hostile bids but Horvath said Friday in an interview that Green Growth would prefer a friendly deal because the proposal hinges on the expertise that each company brings to the table.

"Aphria brings proven cultivation experience and, from what we've seen, they're bringing that in a highly sophisticated and technological way to cannabis," Horvath said.

He listed his management team's accomplishments as the Victoria's Secret lingerie brand, Bath & Body Works personal care shops, American Eagle denim specialty stores and DSW, a shoe retailing company.

Horvath said he thinks a combination of the two companies would be a win for both sides and "we hope that the board ultimately sees it that way as well. And we're happy to have further discussion with them to find the best way forward."

Aphria said it has established an independent committee of directors to consider any formal offers it receives.

In the meantime, Aphria said it would continue to execute its current corporate strategy.

Earlier this month, a Toronto law firm said it filed a proposed class action against Aphria and two of its officers after the company was targeted by short-sellers.

Koskie Minsky LLP alleges Aphria made false and misleading statements related to its acquisition of LATAM Holdings, a claim that has not been tested in court.

The proposed class action came after short-sellers Quintessential Capital Management and Hindenburg Research alleged in early December that LATAM's assets in Colombia, Argentina and Jamaica were "largely worthless."

Aphria said on Dec. 6 that it had set up a special committee of independent directors to review the LATAM acquisition.