Tilray surges 27% after $4 billion merger with Aphria creates the world's biggest cannabis company. But this is certainly a sophisticated strategy. , which was one of the first platforms for public offerings during the 1990s. Certain information in this communication constitutes forward-looking information or forward-looking statements (together, forward-looking statements) under Canadian securities laws and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbor created by such sections and other applicable laws. In Canada, the combination of Aphria and Tilray will create the leading adult-use cannabis company with gross revenue of C$296 million (US$232 million) in the adult-use market for the twelve months reported by each company. On Dec. 16, 2020, Aphria (APHA) and Tilray (TLRY) announced a merger that has created the worlds largest cannabis company. Value-priced products tend to have lower margins than premium-priced products, because with premium products there's far more room for marking up prices based on relatively inexpensive features like trendy branding. The combined company had a market cap of approximately US$8.2 billion based on the closing stock prices on April 30, 2021. Aphria Inc. is a leading global cannabis company inspiring and empowering the worldwide community to live their very best life. ahead-of-print. Both stocks jumped after the announcement as markets welcomed consolidation in an industry marred by perennial losses. Nothing short of a trainwreck and I have been sounding the alarms since they admittedly cooked the books with the Aphria merger (see the actual admission in Michael Bowen sur LinkedIn : Tilray discloses $1.2B quarterly loss, plan to buy cannabis rival Hexo for The Company expects to deliver approximately US$81 million (C$100 million) of annual pre-tax cost synergies within eighteen months and plans to achieve cost synergies in the key areas of cultivation and production, cannabis and product purchasing, sales, and marketing, and corporate expenses. www.cannabisbusinesstimes.com is using a security service for protection against online attacks. The Company is well-positioned to pursue international growth opportunities with its strong medical cannabis brands, distribution network in Germany, and end-to-end European Union Good Manufacturing Practices (EU-GMP) supply chain, which includes its production facilities in Portugal and Germany. Tilray's management and advisers briefed the company's board on Feb. 21 about recent discussions with Aphria, as well as combinations with other potential merger partners or acquisition targets. First, the terms of the deal will mean that their shares get a bit diluted. While Tilray investors have kept their shares after the merger, Aphria stockholders received 0.8381 Tilray shares for each Aphria share that they held. The challenge of coordinating previously independent businesses makes evaluating the business and future financial prospects of the Combined Company following the Arrangement difficult. But there are other reasons to consider. Tilrays London, Ontario facility will also provide Aphria with excess capacity to increase production of additional form factors including their branded edibles and beverages. Tom Taulli (@ttaulli) is the author of various books on investing and technology, including Artificial Intelligence Basics, High-Profit IPO Strategies and All About Short Selling. Tilray (TLRY) and Aphria (APHA) both do something with cannabis. Tilray is a Canadian producer that cultivates and sells medical and recreational cannabis. LEAMINGTON, Ontario & NANAIMO, British Columbia--(BUSINESS WIRE)--Dec. 16, 2020-- Aphria Inc. (Aphria) (TSX: APHA and Nasdaq: APHA), a leading global cannabis company inspiring and empowering the worldwide community to live their very best life, and Tilray, Inc. (Tilray) (Nasdaq: TLRY), a global pioneer in cannabis research, cultivation, production and distribution, today announced that they have entered into a definitive agreement (the Agreement) to combine their businesses and create the worlds largest global cannabis company (the Combined Company) based on pro forma revenue1. The merger has already been completed after some delay, and Aphria shares had a name change. Material risks that could cause actual results to differ from forward-looking statements also include the inherent uncertainty associated with the financial and other projections; the prompt and effective integration of the Combined Company; the ability to achieve the anticipated synergies and value-creation contemplated by the proposed transaction; the risk associated with Aphrias and Tilrays ability to obtain the approval of the proposed transaction by their shareholders required to consummate the proposed transaction and the timing of the closing of the proposed transaction, including the risk that the conditions to the transaction are not satisfied on a timely basis or at all; the risk that a consent or authorization that may be required for the proposed transaction is not obtained or is obtained subject to conditions that are not anticipated; the outcome of any legal proceedings that may be instituted against the parties and others related to the Arrangement Agreement; unanticipated difficulties or expenditures relating to the transaction, the response of business partners and retention as a result of the announcement and pendency of the transaction; risks relating to the value of Tilrays common stock to be issued in connection with the transaction; the impact of competitive responses to the announcement of the transaction; and the diversion of management time on transaction-related issues. bnnbloomberg.ca. All rights reserved. Cowen served as financial advisor, and Cooley LLP and Blake, Cassels, and Graydon LLP acted as legal counsel to Tilray. Next, the economics of the deal are more . Management claims that there should be around $25 million in annual cost synergies to realize after the purchase is complete, but it's unclear how long that will take to occur. The move should leave the company with a credible claim to being the largest marijuana business in Canada, and it will contribute to Tilray's reputation as being one of the more acquisition-hungry competitors. The combined . Third Quarter Performance. Even with the growth opportunities of the cannabis market, there is something else needed for a successful company: scale. Here's When I See Cannabis Stocks Being Hot Buys Again, The IRS Is Urging Millions of Early Filers to Amend Their Tax Return, 1 Magnificent Growth Stock to Buy Hand Over Fist Before It Soars 163%, According to Wall Street, 3 Reasons to Buy Nvidia Stock Before It Skyrockets, 3 Former High-Flying Stocks Down 92% to 99% That Billionaire Investors Can't Stop Buying, Join Over Half a Million Premium Members And Get More In-Depth Stock Guidance and Research, Motley Fool Issues Rare All In Buy Alert, Copyright, Trademark and Patent Information. Tilrays mission is to be the trusted partner for its patients and consumers by providing them with a cultivated experience and health and wellbeing through high-quality, differentiated brands and innovative products. When it does exist, it could become the world's biggest cannabis company eclipsing Canopy Growth by market cap.. Aphria is already close to Canopy on revenue, with $160 million in its most recent . Completion of the Arrangement is subject to regulatory and court approvals and other customary closing conditions. Shares of both companies traded higher on Wednesday, with Tilray stock up 22.74% at $9.66 and Aphria up 2.75% to $8.34. The companys stock will continue to list on Nasdaq under the ticker TLRY and will start trading on the Toronto Stock Exchange on Wednesday under the same ticker. Tilray Inc. is a leading global cannabis-lifestyle and consumer packaged goods company with operations in Canada, the United States, Europe, Australia, and Latin America that is changing people's lives for the better one person at a time by inspiring and empowering the worldwide community to live their very best life by providing them with products that meet the needs of their mind, body, and soul and invoke a sense of wellbeing. Aphria and Tilrays complementary brands will be available across economy, value, core, premium and premium plus product offerings. Kind of amazing that they can write off $1.1B in the quarter ("market cap reduction", is that the new way of saying we wrote off the terrible buys we did?) Now that the Aphria/Tilray merger has been announced, we can expect other top-tier Canadian pot stocks, like Canopy Growth Corp (NASDAQ:CGC) and Aurora Cannabis Inc (NYSE:ACB), to begin to see . The Combined Company will be the largest global cannabis company based on pro forma revenue for the last twelve months reported by each company with scale and breadth across major geographies and a complete portfolio of market leading brands in the major Cannabis 2.0 product categories. Although, assuming the deal does go through as seems reasonable then there could be a short-term increase in APHA stock. Through Tuesday's close, Tilray shares have fallen 54% in 2020, while . Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. But TLRY stock will likely fall once the merger goes through since it may take time for synergies to work. 1 Based on the most recently reported quarterly financial statements for Aphria and Tilray.2 Non-GAAP measure which may not be consistent between companies in our industry. Investor Relationsinvestors@aphria.com, Tilray contacts: Media Amy Bonwick, 647-515-3748amy@pomppr.com, Investors Raphael Gross The Combined Company is expected to have a strong, flexible balance sheet, cash balance and access to capital giving it the ability to accelerate growth and deliver attractive returns for stockholders. For a more detailed discussion of risks and other factors, see the most recently filed annual information form of Aphria and the annual report filed on form 10-K of Tilray made with applicable securities regulatory authorities and available on SEDAR and EDGAR. To listen to the live call, dial (647) 427-7450 from Canada and the U.S. or (888) 231-8191 from international locations and use the passcode 4334816. www.cannabisbusinesstimes.com is using a security service for protection against online attacks. Please enable cookies on your browser and try again. In the United States, the Combined Company will have a strong consumer packaged goods presence and infrastructure with two strategic pillars, including SweetWater Brewing Company (SweetWater), a cannabis lifestyle branded craft brewer, and Manitoba Harvest, a leading hemp food manufacturer and a pioneer in branded CBD and wellness products. However, it looks a good buy now given the strong fundamentals of the new entity. Even Amazon has supported the federal legalization of marijuana. For a more detailed discussion of risks and other factors, see the most recently filed annual information form of Aphria and the annual report filed on form 10-K of Tilray made with applicable securities regulatory authorities and available on SEDAR and EDGAR. TLRY, The April 14 th Aphria special shareholder meeting was announced after both companies received the necessary regulatory approvals to complete the proposed business combination and we are favorable on how the transaction has advanced. The Tilray/Aphria merger must be at risk of falling apart. Operational Efficiencies Expected to Generate Approximately US$81 Million Annual Pre-Tax Cost-Saving Synergies for New Tilray Within Eighteen Months, Irwin D. Simon, Aphrias Chairman and CEO, will Lead the New Tilray and Has Appointed New Executive Leadership Team; New Members of the Board of Directors Also Appointed, New Tilray Poised to Transform the Global Cannabis Industry as a Consumer Packaged Goods Powerhouse with a Diversified Portfolio of Leading Brands, Renewed Financial Strength to Drive Accelerated Growth Strategy and Sustained Profitability, Tilrays Shares Will Continue Trading on the NASDAQ Under Symbol TLRY; Starting May 5, 2021, Tilrays Shares Will Commence Trading on the Toronto Stock Exchange Under Symbol TLRY. There is a risk that some or all the expected benefits of the business combination may fail to materialize or may not occur within the time periods anticipated by the Company. A worker smiles as she shows cannabis plants at the Tilray factory in Cantanhede, Portugal April . 0 Likes, 0 Comments - Michael A. Gayed, CFA (@leadlagreport) on Instagram: "Aphria shareholders overwhelmingly voted in support of a merger with Tilray. In an all-stock deal agreed to last . Navigating the tides of an emerging global cannabis industry: the Aphria-Tilray merger decision The CASE Journal 18 maart 2022 Eghbali-Zarch, M., Marlowe, J. and Brennan, S. (2022), "Navigating the tides of an emerging global cannabis industry: the Aphria-Tilray merger decision", The CASE Journal, Vol. is the author of various books on investing and technology, including Artificial Intelligence Basics, High-Profit IPO Strategies and All About Short Selling. Aphria shareholders received 0.8381 of a Tilray share for each Aphria common share owned. Mar. A telephone replay will be available approximately two hours after the call concludes through January 13, 2021. The resulting company, which is expected to generate . Full details of the Arrangement will be included in a management information circular of Aphria and in a proxy statement of Tilray to be delivered to Aphria Shareholders and the Tilray Stockholders, respectively, in the coming weeks. What will this mean? Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. Ciara Linnane is MarketWatch's investing- and corporate-news editor. The combination of Aphria and Tilray brings together two highly complementary businesses to create the leading cannabis-focused CPG company with the largest global geographic footprint in the industry. To ensure the most secure and best overall experience on our website we recommend the latest versions of, Internet Explorer is no longer supported. In 2021, legacy Aphria acquired legacy Tilray in a reverse merger and . The required two-thirds majority of Aphria shareholders backed a motion to approve the deal at a virtual meeting on Wednesday. Husch Blackwell LLP ' is very knowledge in the world of cannabis ' and handles cannabis and industrial hemp regulatory matters across all 50 states and Washington DC. However, in the case of Aphria and Tilray, both stocks rose after the merger news. After Aphria and Tilray merge, the combined entity will be called Tilray and the shares will continue to trade on Nasdaq under the ticker TLRY. Published by NCV Newswire. The companies are . And Tilray needs to beef up its margins, not grow its collection of value brands from two to five. SPX, Words such as forecast, future, should, could, enable, potential, contemplate, believe, anticipate, estimate, plan, expect, intend, may, project, will, would and the negative of these terms or similar expressions identify forward-looking statements, although not all forward-looking statements contain these identifying words. 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, said Mr. Simon. Approval of a majority of the votes cast by Tilray stockholders will be required to, among other things contemplated by the Agreement, authorize the issuance of Tilray shares to Aphria shareholders pursuant to the Arrangement. View the full release here: https://www.businesswire.com/news/home/20201216005519/en/. 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