Tilray and Aphria to Create Global Cannabis Giant in $4 Billion Deal


Canadian marijuana firms Tilray and Aphria confirmed on Wednesday plans to merge in an all-stock transaction that will create the world’s largest cannabis company by revenue.

Under the terms of the transaction, Aphria shareholders will receive 0.8381 shares of Tilray for each Aphria common share, giving them control of 62% of the combined company.

Meanwhile, Tilray shareholders will maintain their positions and own the remainder of the company, which will retain the Tilray name and continue to trade on THE NASDAQ under the ticker symbol TLRY.

The blockbuster agreement, structured as reverse takeover, represents a 23% premium for Tilray shareholders based on a Dec. 15 closing price of $7.87. As of press time, shares of TLRY were trading up more 21%, to $9.56, following the news.

The deal is valued at $3.9 billion and will create a global cannabis giant with nearly $700 million in annual revenue.

Though Aphria will become a wholly-owned subsidiary of Tilray, its CEO, Irwin Simon — a CPG industry veteran who founded the Hain Celestial Group — will lead the combined companies and serve as the chairman of the board.

Aphria’s current board of directors will control seven of the nine board seats. Current Tilray CEO Brendan Kennedy will continue to serve on the board, along with one additional Tilray director that has yet to be named.

The deal, which is pending shareholder and regulatory approvals, is expected to close in the second quarter of 2021.

BNN Bloomberg first reported that the two companies were in advanced merger talks on Tuesday evening.

“This is an exciting day for both companies including our 2,500 employees, for the cannabis industry, and for patients and consumers around the world,” Aphria’s Simon said via a joint news release. “We are bringing together two world-class companies that share a culture of innovation, brand development and cultivation to enhance our Canadian, U.S., and international scale as we pursue opportunities for accelerated growth with the strength and flexibility of our balance sheet and access to capital.”



The two companies expect to deliver nearly $79 million (C$100 million) in annual pre-tax cost synergies in the two years following the close of the deal.

A news release highlighted cultivation and production, cannabis and product purchasing, sales and marketing, and corporate expenses as “key areas” where cost synergies are expected.

A consolidation of the combined companies’ cultivation and production infrastructure throughout Canada and Europe is also being discussed.

Aphria — which has generated positive adjusted EBITDA in each of the last six quarters — plans to use its 1.3 million sq. ft. Leamington, Ontario facility to produce Tilray brands and “replace the need for Tilray to use wholesale cannabis purchases from other licenses producers.”

Meanwhile, Tilray’s London, Ontario facility will enable Aphra to increase production of edibles and beverages. The two companies are also considering using Tilray’s Nanaimo, British Columbia facility to produce Aphria’s premium Broken Coast brand.

According to an investor presentation, Aphria facilities can cultivate cannabis for less than $C1 (about $78 cents) per gram.

When asked during a call with investors and analysts how the combined companies’ scale would improve its position in the Canadian marketplace, Kennedy said state-run cannabis stores are looking for consistent and reliable supply from established players.

“That has been one of the largest challenges in the past, and I think that together there are opportunities from scale across all of the product categories — from flower to edibles, [and] from oil to beverages,” he said.

Simon added that the combined companies would look to capture 30% market share in Canada and be better equipped to manage supply and retailer out-of-stock issues. He also said the ability to invest in innovation while driving down costs would be critical as the two companies compete in the face of cannabis pricing reductions.


Beverage Focus

The merger with Tilray will also give Aphria the ability to expand its growing interest in beverages and Simon repeatedly highlighted the company’s recent acquisition of Atlanta-based craft beer maker Sweetwater Brewing as a key component of its future ambitions in the U.S.

“The combined company is expected to leverage Sweetwater’s craft beer manufacturing and distribution network to build brand awareness for the combined company's leading brands, via its craft beers, hard seltzers, and other beverages, as we seek to take advantage of the opportunities for both the adult-use, and health and well-being beverages, which is a $200-plus billion market,” he said.

Irwin also pointed to Tilray’s Manitoba Harvest hemp and CBD business, which has access to 17,000 retail stores across the U.S., as a driver of the deal.

“We also expect to pursue the opportunity to expand with new or existing CBD, or other cannabinoid products, leveraging Manitoba Harvest’s strong hemp and wellness product platform,” he said.

Those two businesses, as well as Tilray’s joint venture with Anheuser-Busch InBev (ABI), called Fluent Beverage Company, could help position the combined company for success in the U.S. when marijuana is legalized at the federal level — something many within the cannabis sector believe is around the corner.

“It's amazing to think about how we are ready in the market in the U.S., with our combined hemp [and] beverage offerings,” Simon said, adding that the combined company expects to introduce its “cannabis lifestyle brands” in the U.S. ahead of legalization.

“We believe we have a great opportunity for continued growth in the U.S. and the Canadian beverage industries, by leveraging Sweetwater’s innovation, knowledge, and expertise to introduce adult-use cannabis brands, via craft beers and other beverages,” Simon said. “This includes leveraging Aphria’s and Tilray’s proven distribution network to sell Sweetwater’s 420 cannabis lifestyle brands in Canada. We also hope to leverage opportunities through Tilray’s already well-established relationship with InBev.”

When asked about the future of Fluent Beverage Company and possible change of control provisions impacting Tilray’s continued involvement in the JV, Kennedy would only say that conversations are ongoing.

Simon, who is bullish on the future of cannabis-infused drinks, added that he is “really excited” at the prospect of bringing Sweetwater and ABI together to work on cannabis drinks innovation.

“I think there is a great opportunity to work with them,” he said of ABI and Tilray’s JV.


Building a Diverse CPG Business

Simon, who told THCnet last month that he viewed Aphria as a robust CPG platform with interests In cannabis, echoed those sentiments during the call.

“I think Manitoba Harvest is a great asset coming out of that consumer world,” he said. “Whether it is hemp, whether it is CBD, or ultimately THC products in that consumer world, and what we can do with that is tremendous.”

He added that Tilray’s existing partnership with ABI, and the potential to create a wide array of drinks, as well as its various interest in the food, alcohol and medical cannabis businesses, puts the company firmly in the “consumer business.”

“This really brings us a major portfolio of the next generation of products, that the combined companies have to work with,” he said.

Simon added that the combined company would continue to pursue additional M&A opportunities, potentially in the U.S. when federal legalization occurs.

“We're going to have to buy something or create something in the U.S. market when legalization does happen,” he said, adding that non-cannabis versions of the company’s Riff, Good Supply and Solei brands would be sold throughout the U.S. alcohol sector in the “very near future.”

Outside of North America, the combined company said there is growth opportunities in the medical cannabis markets of Germany and Portugal, as well as other European countries.

Cowen served as a financial advisor to Tilray, while Jefferies LLC advised Aphria.

Additional information is available in the official news release.

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