Tilray Inc. and Aphria Inc. agreed to an all-stock deal that will create an entity with a combined equity value of about C$4.8 billion or $3.8 billion, according to Bloomberg. The new company will keep Tilray’s name and ticker symbol on the Nasdaq. Aphria will pay a 23% premium on Tilray’s December 15 closing price of $7.87.

  • The new company will sell cannabis products across Canada and be well-positioned to pursue growth opportunities elsewhere.
  • Aphria shareholders will own 62% of Tilray’s stock under the terms of the transaction, characterized as a “reverse acquisition” of Tilray.
  • The combined group’s 12-month sales of C$874 million surpass that of industry leaders such as Curaleaf Holdings Inc. and Canopy Growth Corp.
  • The combined company will have a strong, flexible balance sheet, cash balance, access to capital, and reduce annual costs by about C$100 million before taxes within 24 months of deal completion.
  • The deal reinforces that cannabis is a fast-evolving sector as more U.S. states legalize it while the European market is projected to grow to $359 million in 2020, up 25% from 2019.
  • Tilray-Aphria deal is expected to close in the second quarter of 2021 and includes a right to match higher bids and a reciprocal termination fee of C$65 million under certain circumstances.

Tilray and Aphria stocks are currently gaining. TLRY: NASDAQ is up 22.05%, APHA: TSE is up 0.68%