Canadian Cannabis Companies Aphria and Tilray Announce Merger

Two of Canada’s leading licensed producers of legal cannabis have announced plans to merge. Ontario-based Aphria Inc. and British Colombia-based Tilray Inc. are joining forces and will be the largest marijuana producer in the world by sales. The all-stock deal was first disclosed Wednesday.

The combined equity value of the two companies is in the neighborhood of $3.9 billion. The new entity will be known as Tilray, trading on the NASDAQ exchange under the ticker symbol TLRY. Once the reverse-merger is complete, Aphria shareholders will own 62% of the outstanding Tilray shares. That is a premium of 23% based on share price at market close on the day preceding the merger news.

The new and improved Tilray will be well-positioned in the global marketplace, having already established themselves in Portugal as well as Germany via Aphria. A $300 million acquisition of Sweetwater Brewing Company, a leading craft beer maker, by Aphria mere weeks ago signals a desire for the combined company to enter the infused beverages category in both Canada and the U.S. Aphria had also recently acquired leading hemp foods and CBD company Manitoba Harvest, making the newly minted behemoth on its way to becoming one of the first cannabis conglomerates.

Based on the previous 12 months, Aphria and Tilray had a combined revenue of $874 million and will now constitute a 17 percent market share in the Canadian cannabis market, by far the biggest in the country. 

Irwin Simon, Aphria’s current CEO and chair, will assume those same positions in the new firm.

“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 in a press release. 

“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.”