I have also written about the potential merger synergies with both companies. The merger between Aphria and Tilray makes perfect sense. Simply click here to get the full story now. The combination of Aphria and Tilray is expected to generate roughly $81 million in annual pre-tax cost savings within 18 months of the transaction's completion. All told, nothing here really stands out. Reddit group WallStreetBets also pumped up some marijuana stocks. Its gained a whopping 90% so far in 2021. at a special meeting on Friday, according to media reports, paving the way for the creation of the world's biggest cannabis company measured by revenue. Mar. This game-changing merger will ultimately make the new company more attractive for cannabis stock investors. Aphria has agreed to acquire U.S. craft beer company Sweetwater Brewing, which makes cannabis-infused beverages, and Tilray is a partner of Anheuser-Busch InBev. Aphria shareholders will also own 68% of the new . The new company will trade under Tilrays ticker on the Nasdaq, and Aphria shareholders will own 62% of Tilrays stock under the terms of the transaction, which was characterized as a reverse acquisition of Tilray, the companies said. Meanwhile, Tilrays current CEO and Chairman will be one of the new companys board of directors. What's Next for Tilray Now That Its Merger With Aphria Is Complete? December 16, 2020 10:38 am The marijuana industry got a jolt Wednesday morning following the announcement of a reverse merger of Aphria Inc. ( NASDAQ: APHA) and Tilray Inc. ( NASDAQ: TLRY). That's why we're seeing prices coming down. Why Is Bed Bath & Beyond (BBBY) Stock Up 15% Today? Tilray (NASDAQ:TLRY) shareholders will vote on the all-stock merger with Aphria (NASDAQ:APHA) on April 30. Copy and paste multiple symbols separated by spaces. That equals 632 million in losses (U.S. $505 million). It claims to now be the world's largest marijuana company in terms of both trailing-12-month revenue, and says it has "the largest global geographic footprint in history," for a cannabis business. The two Canadian cannabis giants had been in talks . In the all-stock merger, Aphria shareholders will receive 0.8381 shares of TLRY stock for each share of APHA they own. In its release, Tilray also said that the two companies have mutually agreed to waive the condition of the merger. Thats 40% of the pro forma total for both companies. Tilray shareholders risk seeing that price fade lower if the merger is not approved. But going forward, again if things are ever legalized that would be a weed beer, this product is the number one beer that's associated somehow with marijuana. However, the company moved the meeting to April 30. Hopefully, the merger will find more than 100 million CAD in synergies to make this company profitable. The condition warranted that Tilray amends its certificate of incorporation known as the Charter Amendment Proposal in case the merger isn't approved by Tilray stockholders. Personally, Id rather see Aphria go it alone or look to the unnamed company that too approached Aphria about a merger last year. Tilray and Aphria are joining in what is being called a pot stock megamerger. You can go short on Tilray stock and long on Aphria stock to benefit from the merger arbitrage. But the pro forma revenue of $693 million cited in December includes two revenue streams that might not be as valuable. Market Realist is a registered trademark. By browsing this site, you agree to our cookies. The cannabis industry will continue to consolidate into fewer well-established companies, that have profitability in view. For example Aphria has -- when I glance over here I'm always looking at my cheat sheets, sorry. The weed stock industry continues to shape up positively as newly legalized states open up more expansion opportunities. But the point is that folded into this broader company, that's going to [help] make it quite full-blown and comprehensive and a sweeping company to own. For Aphria and Tilray, the deal positions the companies to take advantage of potential U.S. federal legalization as well as the prospect of more legalization in Europe. Outsmart the market with Smart Portfolio analytical tools powered by TipRanks. Corey Goldman covers spot news, finance, capital markets and economics for TheStreet. On December 16th, Aphria (TSX: APHA) (NASDAQ: APHA) and Tilray (NASDAQ: TLRY) announced a pending stock-based merger. Will More Tobacco Giants Invest in Marijuana Stocks? Adjusted EBITDA did rise modestly but thanks to a $4.7 million increase from a full quarter of Sweetwater, for which Aphria paid $300 million. 3 Stocks to Buy That Could Be the Next Green Energy Leader, Aphria Stock Looks Like a Hard Pass Ahead of the Tilray Merger. The combined company also will be a leader in cannabis-infused drinks. You must be 21 years or older to view and purchase products featured on this site. The products featured have not been directly evaluated by the US Food and Drug Administration (FDA). Through Tuesdays close, Tilray shares have fallen 54% in 2020, while Aphrias have risen 56%. But again relatively speaking, they're going to be a big player in marijuana, they're going to be hard to ignore, they're going to be the largest Canadian marijuana company by far. On December 16, 2020, Tilray (TLRY) and Aphria (APHA) announced a merger that would create the largest marijuana company globally. Now that the deal is done, the hard part comes: Tilray 2.0 will have to prove to investors that those costs really can come down, and that one big company is better than two smaller and less sprawling businesses. Aphria shareholders will receive 0.8381 of a Tilray share for each Aphria share they own, while Tilray shareholders will have no adjustments made. Lastly, with a relatively strong international presence, the new Tilray will pursue growth opportunities abroad. Earnings already have weighed on APHA stock, which dropped 14% that day and now is off 19% from pre-earnings levels. Marijuana stocks surge as NY Governor says state legalization is close. Copyright 2023 Market Realist. These symbols will be available throughout the site during your session. This is why Aphria's merger with Tilray is so critical. Aphria's CEO Irwin Simon is taking over that role with the reconstituted Tilray, and has also become the chairman of the new company's board of directors. On Monday, Tilray's shares closed 7.2% lower, against the 0.3% rise of the S&P 500 index. Yet Aphria is the business that needs to do more of the heavy lifting post-merger. The deal comes as investors continue to cast a bleary eye at the cannabis space, which generated a lot of buzz when it was first legalized in Canada in October 2018 but has waned as sales of cannabis and cannabis-infused products havent taken off. Relative to FY2021 (ending March) consensus estimates, Canopy Growth (NASDAQ:CGC) trades at about 20x EV/revenue, and Sundial Growers (NASDAQ:SNDL) an even higher multiple. The combined company, which will operate under the Tilray name, will be the worlds largest cannabis company, with a market capitalization of approximately $8.2 billion. That admittedly is cheap by cannabis standards. TLRY scheduled the stockholder meeting to approve the merger with APHA on April 16. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. On March 1, APHA stock closed at $18.76, while TLRY stock closed at $25.56. Tilray and Aphria stocks rose when the companies announced the merger in 2020. The spread has since narrowed to less than 2%. Now, all eyes will be on the TLRY stockholder meeting later this month when the company takes up the merger vote. In this video from Motley Fool Live from Dec. 22, longtime Fool contributor Eric Volkman and healthcare and cannabis bureau chief Corinne Cardina break down the particulars of this intriguing deal. Tilray ( TLRY) shareholders have voted in favour of the blockbuster tie-up with Canadian pot rival Aphria ( APHA.TO ) ( APHA ), paving the way for the formation of a new global cannabis. Markets welcomed the news as a sign of consolidation in the. Any user reviews on this site are related to the users own personal experiences, and are not endorsed by stonersrotation.com. May 3, 2021 8:29 AM EDT. Some investors might want to wait to see if the merger goes through. The two companies see $79 millionin cost synergies achievable within two years. Each Aphria share will become 0.8381 shares of Tilray stock, on top of that companys existing share base. Again, the stock still is up 90% so far this year. Aphria (@aphriainc) said 99.38% of its shareholders voted to approve its merger with Tilray (@tilray). In reality, this is Aphria taking over Tilray. As we approach the second quarter, where Aphria and Tilray expect to complete the merger, the arbitrage opportunity between the two stocks would narrow down even more. Aphria stockholders will get 0.8381 Tilray shares for each APHA share that they hold. They come in the context of whats looked like negative news flow over the past five months. For a start, this merger is expected to create a combined equity value of $3.9 billion. Cardina: Can you tell us what investors need to know? I should mention, they're also quite active in international markets. First, Aphria has a distribution business in Germany that accounted for more than half of revenue in the third quarter. At TLRY stock's current price, that would put shares at around $15.25. TipRanks' multi-award winning platform ranks financial experts based on measured performance and the accuracy of their predictions so investors know who to trust when making investment decisions. have merged after months of negotiations, creating a company with a combined market cap of $3.3 billion. To make the world smarter, happier, and richer. They're going by trailing 12-month revenue and I don't know if going forward that's sustainable. 7 Sorry Pharma Stocks to Sell in April Before Its Too Late, Louis Navellier and the InvestorPlace Research Staff, 5 Penny Stocks With Explosive 5X Potential, Another Rare Bullish Indicator Flashed Last Week, 7 Stocks to Sell in April Before They Crash and Burn, Mullen Files to Resell Up to 2.1 Billion Shares of MULN Stock. Results for the fiscal third quarter (ending Feb. 28) were not promising on that front. As such, these devices are not designed to cure or treat disease. However, the meeting of Tilray stockholders was postponed. Tilray Has 64% Upside After "Perfect Match" Merger, Analyst Says, The IRS Is Urging Millions of Early Filers to Amend Their Tax Return, 1 Warren Buffett Index Fund Could Turn $100 Per Week into $1 Million, 2 Stocks That Could Join Apple, Microsoft, Amazon, and Alphabet in the $1 Trillion Club, Join Over Half a Million Premium Members And Get More In-Depth Stock Guidance and Research, Copyright, Trademark and Patent Information. The Cannabis ETF According to executives from both Aphria and Tilray, the merger is targeted at cost savings and creating synergy. Were a community for all things stoner from entertainment to guides and smoking accessories, we honor the green goddess. The all-stock deal that will create a new powerhouse in the pot industry, with an equity value of about C$4.8 billion ($3.8 billion). Aphria shareholders voted in favor of the proposed merger with rival Tilray,which will create the worlds largest cannabis company by revenue. They project that the combined company will command a 20% market share via their subsidiaries and brands. Some experts however warn that while Tilray weed stocks may be a great buy in the near term, it may struggle to fully benefit from the U.S. marijuana market until pro-cannabis federal laws are established. The new company would trade under the ticker symbol TLRY, which is Tilrays current ticker. When the symbol you want to add appears, add it to My Quotes by selecting it and pressing Enter/Return. Aphria shareholders will end up owning 62.1% of the combined company. shareholders voted to approve the Canadian cannabis company's proposed merger with Aphria Inc. They have lots of growing assets, they are active in every consumable product category including the so-called Cannabis 2.0 products in Canada which are derivatives like extracts, there's also beverages, marijuana-infused beverages. TLRY was trading at almost twice what it should have based on the merger ratio. All Rights Reserved. Type a symbol or company name. Learn More. In using this website you accept the terms of service and are responsible for complying with all laws and regulations, including applicable local laws. However, since then, both TLRY and APHA have fallen sharply amid the sell-off in marijuana stocks. That business has gross margins of just 13% and not all of the revenue comes from cannabis. A deviation in stock prices can lead to merger arbitrage. TheCombined Company will be increasingly well positioned to deliver a sustainable attractive return for our combined shareholder base." Although Tilray is down by around 50% year to date, Aphria is up by 72% this year. All Rights Reserved. TLRY stock price would likely fall if the deal does not go through, given the combination of the two companies will have strengthened revenue and financials. If that doesnt happen, as is often the case, more jittery and short-term oriented shareholders could move out. Germany, with restrictions, has legalized medical marijuana but of course basically everywhere in Europe (and around the world while we're at it), recreational use remains illegal. Combined, Tilray and Aphria will make $874 million in revenue compared to $842 million by runner-up Curaleaf (OTCMKTS:CURLF). The Tilray and Aphria merger has received regulatory approvals and APHA stockholders have also confirmed the merger. The merger arbitrage has come down heavily over the last few weeks. Anytime a company, or companies, are in a position to cut down on that, to combine assets, to rationalize like that, that's a positive development. Aphria said that the reverse-acquisition of Tilray was approved by 99.38% of the shares represented at its shareholders' meeting. Tilray shares closed Friday down 1.78%, but have gained 122% in the year to date. The average analystprice target of C$22.05impliesupsidepotential of about24.6%to current levels. THCX, In terms of leadership for the combined company, Aphrias current CEO and Chairman, Irwin Simon will work in the same capacity. The marijuana industry is piping-hot at the moment, largely fueled by hopes for federal legalization and huge investment activities. But Aphria, they bought not long ago SweetWater Brewing. Ive long been a skeptic toward Tilray, whose growth and revenue base hardly stand out among Canadian players. Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. Related News:good natured Products Revenue Increases 65% In FY2020The Green Organic Dutchman Gives Update On OperationsAphria Shareholders Approve Tilray Merger. Moreover, vaporizing does not necessarily eliminate toxins. Part of the cause of the sell-off is that APHA got some draft from the Reddit rallies, even if it didnt move as high as did Tilray. December saw Tilray and Aphria announce that they will merge, creating the world's biggest cannabis company by revenue in the process. Copyright 2023 MarketWatch, Inc. All rights reserved. The combined U.S. operations will focus on Sweetwater and Manitoba Harvest, which makes branded hemp and CBD products. . After Tilrays (TLRY) shareholders voted in favor of the proposed merger Aphria (APHA) last Friday, the two cannabis companies announced today the completion of the transaction. Interestingly, it also amended the bylaws and said that the quorum requirement for the stockholder meeting would be one-third of the voting power. lost 361 million CAD in the nine month period ending Feb. 28. Aphrias shareholders have already voted and approved the merger on April 15. For Tilray, it will provide a much-needed boost to their balance sheet after a rocky year. ET. Both stocks will, assuming the merger closes, end up in the same place. Tilray ( TLRY) - Get Free Report and Aphria ( APHA) - Get Free Report said Monday they had completed their merger, creating the world's largest cannabis company by revenue . However, given the fragmented nature of the marijuana industry, I dont see any real regulatory hurdle for the merger. 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, the companies said. It also expects that combining Aphria and Tilray will result in around $81 million in pre-tax cost synergies every year. Another nice thing about this merger that shareholders in both companies should be happy about, it's a comprehensive company [together]. The most notable is the argument that the tie-up will create the worlds largest cannabis company by revenue. You must be 21 years of age or older to view the page. Thats not cheap, either. There will be a chance to buy TLRY cheaper down the road. First of all, economies of scale. Since then it has more than doubled to $18.36 as of April 29. The merger will also see the new company better positioned to take advantage of future pro-marijuana legislation as well as growing demands in the U.S. and Europe. +2.93% quotes delayed at least 15 minutes, all others at least 20 minutes. Regardless, the merger should save a lot of money. The delayed merger vote and the new quorum requirements have raised concerns. +0.33% Cost basis and return based on previous market day close. On the date of publication, Mark R. Hake did not hold a long or short position in any of the securities in this article. Thanks to the crazy Reddit-driven rallies in February, the spread between TLRY and APHA ballooned. Eric Volkman has no position in any of the stocks mentioned. Under the terms of the agreement, Aphria will become a wholly-owned subsidiary of Tilray. Type a symbol or company name. We use cookies to improve your experience. Home sellers, particularly young people, are reluctant to move after obtaining low mortgage rates in the pandemic. The pro-form enterprise value of the company is listed at $3.9 billion. Making the world smarter, happier, and richer. All of the stocks that were pumped by WallStreetBets have fallen sharply from their peaks. Anheuser-Busch CEO on the Bud Light backlash: We never intended to be part of a discussion that divides people, Mark Zuckerbergs total 2022 pay rose because of the increased use of private aircraft, Elon Musk tells Tucker Carlson hell create TruthGPT chatbot to counter AIs liberal bias, Court tosses Berkeleys first-in-nation ban on natural gas in new construction. Eric Volkman has no position in any of the stocks mentioned. The required two-thirds majority of Aphria shareholders backed a motion to approve the deal at the company's shareholders meeting on Wednesday. TLRY stock was at $7.87 on Dec. 15, the day before the merger announcement. When the symbol you want to add appears, add it to Watchlist by selecting it and pressing Enter/Return. Create your Watchlist to save your favorite quotes on Nasdaq.com. Talking of marijuana stocks, they have started to look very overvalued at their peaks even if we discount all of the positives. Aphria shareholders will receive 0.8381 shares of TLRY stock for every one share of APHA stock they own. Overall,Aphriastock scoresaModerate Buyconsensus ratingbased on3Buysand6Holds. The two companies have identified 100 million CAD (US$80 million) in synergies over the next 12 months. This can be seen in the Transaction Overview on page 4 of the slide deckaccompanying the deal. Market Realist is a registered trademark. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Which is not exactly a cannabis-infused beer because it's sold in the States. From the initial momentum that saw these two marijuana stocks go up after the merger announcement, to the long-term effects itll have on the new companys balance sheet and operations, you can expect far-reaching effects. Corinne Cardina: Let's talk about a big splashy deal. Tilray Inc. TLRY, -4.35% shareholders voted to approve the Canadian cannabis company's proposed merger with Aphria Inc. apha ca:apha at a special meeting on Friday, according to media reports . TipRanks is the most comprehensive data set of sell side analysts and hedge fund managers. For a start, this merger is expected to create a combined equity value of $3.9 billion. Against pro forma revenue of $693 million, what will be Tilray looks cheap by sector standards. Making the world smarter, happier, and richer. After Tilray's ( TLRY) shareholders voted in favor of the proposed merger Aphria ( APHA) last Friday, the two cannabis companies announced today the completion of the transaction. OrganiGram Holdings 2Q Revenue Misses Estimates; Shares Plunge 10%, Aphrias 3Q Sales and EPS Miss Estimates; Shares Plunge 14%, Shaw Communications 2Q EPS and Revenue Beat Estimates, Do Not Sell My Personal Information (CA Residents Only). Is the merger a done deal? So that's an encouraging development. Also, in SPACs, there can be significant arbitrage between the common stock and the warrants. In an all-stock deal agreed to last December, each Aphria share held as of April 30 was swapped for 0.8381 of a Tilray share. Per the companys earnings releases, low-margin distribution revenue has totaled nearly $290 million over the past four quarters. has gained 47% and the S&P 500 On Monday, Tilray announced that its "business combination" with peer Aphria (APHA) had been completed, and the two are now one. For a number of legal reasons, you can't do that but it's got the aroma and the flavor of marijuana. The cost savings will also lead to considerable improvements to the bottom line for the new company. This has led many As the mid-year mark is fast approaching, its not unusual for investors to assess the standing of their portfolio. apha The latest among these states is New Mexico. On Monday, Tilray. 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. Offers may be subject to change without notice. Tilray's merger with Aphria, announced in December and set to close in Q2, will create the largest cannabis company. People may receive compensation for some links to products and services on this website. TIlray, however, is postponing its shareholder vote to April 30 (should have been tomorrow). Corinne Cardina has no position in any of the stocks mentioned. Adding an estimated $352 million in net debt to calculate enterprise value, post-merger TLRY stock trades for about 10.5x EV/revenue. TipRanks->. On Friday after the markets closed, Tilray filed a joint preliminary. Copyright Also, there are financial synergies involved. The company is profitable, but not amazingly so. Finally, consolidation is a welcome step in the marijuana industry. 13 min read. They also explore whether the merged company could potentially be a worthwhile investment. Cost basis and return based on previous market day close. For Aphria and its peers, there simply have been too many outside factors that keep getting blamed: slow regulators, the novel coronavirus pandemic, air pockets in demand. Shares of both Tilray and Aphria are up today $TLRY $APHA. Thats true, technically. Invest better with The Motley Fool. It was a juicy merger arbitrage opportunity that has since come down. At the same time, as more U.S. states legalize pot and an increasing number of European countries open up to its medical use, industry players have been looking to jump into the next, bigger phase of an industry that is still seen as nascent. Aphria shareholders voted in favor of the heavy lifting post-merger $ 22.05impliesupsidepotential of about24.6 % to current levels revenue totaled... $ 290 million over the Next 12 months from cannabis the flavor marijuana. Vote on the all-stock merger, Aphria will become 0.8381 shares of TLRY stock for each APHA share they! With a relatively strong international presence, the spread has since come down heavily over last! Over here I 'm always looking at my cheat sheets, sorry trailing 12-month revenue and do! 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