The Aphria and Tilray Mega-Merger Would Create the World’s Largest Cannabis Operator Based on Pro-Forma Revenue, With the Combined Company Having a Pro Forma Equity Value of CDN $5 Billion
After several days of speculation, Aphria (TSX: APHA) (NYSE: APHA) (FRA: 10E) and Tilray (NASDAQ: TLRY) (FRA: 2HQ) announced on Wednesday the two companies have signed a definitive agreement to merge. Upon closing of the proposed merger, the combined company would be the largest cannabis company in the world based on pro-forma revenue.
The deal has already been unanimously approved by both Aphria and Tilray’s board of directors and will now require both companies’ shareholder approval.
Aphria and Tilray intend to merge through a plan of arrangement under the Ontario Business Corporations Act. Upon closing, the combined company would have a pro forma equity value of CDN $5 billion based on the companies’ closing share price on December 15, 2020. Also, based on each company’s pro forma financials for the past year, the combined entity would have generated revenue of CDN $874 million.
Following the merger’s close, the new combined company says it intends to operate under the Tilray name with offices in New York, Seattle, Toronto, Vancouver Island, Leamington, Germany and Portugal.
Aphria’s Irwin D. Simon will continue to serve as the Chairman and CEO of the combined entity, with additional senior leadership positions announced later. The new board of directors will be made up of nine members, including Aphria CEO Irwin D. Simon and six current Aphria directors, as well as Tilray CEO Brendan Kennedy and one additional Tilray board member yet to be named.
Source: APHA/TLRY Investor Deck
Per the deal’s terms, Aphria shareholders will receive 0.8381 shares of Tilray for each Aphria common share, and Tilray stakeholders will see their TLRY share remain unchanged. When all is said and done, Aphria shareholders will own roughly 62% of the outstanding Tilray shares on a fully diluted basis. The transaction will technically result in Aphria conducting a reverse acquisition of Tilray. Based on the market price at the close on December 15, 2020, the merger will represent a premium of 23% to Tilray stockholders.
“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. 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. Our highly complementary businesses create a combined company with a leading branded product portfolio, including the most comprehensive Cannabis 2.0 product offerings for patients and consumers, along with significant synergies across our operations in Canada, Europe and the United States. Our business combination with Tilray aligns with our strategic focus and emphasis on our highest return priorities as we strive to generate value for all stakeholders,” commented Irwin D. Simon, Aphria Chairman and CEO.
“We are thrilled to bring together two cannabis industry leaders. At this nascent stage of development and expansion of the global cannabis market, we believe companies with leading geographic scale, product range and brand expertise are most likely to benefit long-term. By leveraging our combined strengths and capabilities, we expect to be able to meet the needs of consumers more effectively all over the world and advance patient care. With a strong financial profile, low-cost production, leading brands, distribution network and unique partnerships, we believe the Combined Company will be well-positioned to deliver sustainable, attractive returns for stockholders. I look forward to working with Irwin and the Combined Company’s management team to make our consumer products more accessible around the world,” stated Tilray CEO Brendan Kennedy.
“I am honored to work with Brendan Kennedy, a pioneer in the cannabis industry, and the Tilray team as they join forces with our talented employees at Aphria. I look forward to leading the talented teams of both Aphria and Tilray as we seek to create a leading global cannabis and consumer packaged goods company with a portfolio of medical, wellness and adult-use brands consumers love,” added Simon.
For more information on the Aphria and Tilray merger, please refer to the companies’:
Shares of Aphria’s TSX listed APHA stock is currently trading at $9.22 per share, down -5.82% on the day. The company’s NASDAQ listed shares last traded at $7.22, down -5.62%.
Source: Barchart
Learn more about Aphria: Website | IR Website | Investor Deck | APHA Chart
Tilray’s NASDAQ listed TLRY stock is currently changing hands at $8.44, down -5.12% on the day.
Source: Barchart
Learn more about Tilray: Website | IR Website | Investor Deck | TLRY Chart
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The Cannabis Investor does not hold a position in any of the stocks mentioned in this article.
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