(Reuters) – U.S. cannabis retailer Green Growth Brands Ltd (GGB.CD) said on Thursday it would make a hostile takeover bid for Aphria Inc (APHA.TO) in an all-stock deal valuing the Canadian pot producer at C$2.8 billion ($2.06 billion).

Several companies are looking to partner with or buy pot firms to explore opportunities in the Canadian cannabis sector after the country legalized recreational use of marijuana in October.

Green Growth would offer 1.5714 shares for each Aphria share, representing a premium of 45.5 percent over Aphria’s closing price on the Toronto Stock Exchange on Dec. 24. The offer is based on a valuation of C$7.00 per Green Growth share.

Aphria did not immediately respond to a request for comment.

Green Growth said its advisers reached out to Aphria last week after a meeting with the company and after having taken a tour of its facilities earlier this year.

Green Growth then arranged a call with the Aphria board that included a presentation laying out their offer, Green Growth CEO Peter Horvath told Reuters, adding that the company did not hear back from Aphria.

The rationale underlying the bid was recent market declines which also hit the cannabis sector. Among Green Growth’s strengths are a U.S. market footprint and experience, and its $54 million in trailing 12-month revenue already outstrips Aphria’s, Horvath said.

Green Growth said its retail strength and Aphria’s low-cost cultivation and near-term production capacity would create a strong combination.

Earlier this month, Marlboro cigarette maker Altria Group Inc (MO.N) invested $1.8 billion in Cronos Group Inc (CRON.TO), representing by far the biggest investment by a major tobacco conglomerate in a cannabis company.

Green Growth said it had engaged Aphria’s board for a “friendly business combination” before launching the hostile bid and claimed it has the support of Aphria shareholders who hold about 10 percent of the outstanding shares.

The company disclosed that it has acquired a “meaningful toehold position” in Aphria but did not reveal the size of the stake.

U.S. listed shares of Aphria (APHA.N) rose 23 percent after the bell.

Canaccord Genuity is Green Growth’s financial adviser and Norton Rose Fulbright Canada LLP its legal adviser. Kingsdale Advisors is its strategic shareholder and communications advisor and depositary.