Canadian cannabis company Aphria is set to merge with rival Tilray to create the world’s largest cannabis company by sales and help the combined entity crack the US and European markets.
With combined 12-month sales of C$874 million, the new entity would be bigger than Curaleaf Holdings and Canopy Growth, with an equity value of around C$5 billion.
Aphria CEO Irwin Simon will lead the combined company after the merger, which is expected to close in Q2 2021 subject to shareholder approval. Tilray CEO Brendan Kennedy will become a board member.
The new entity will keep Tilray’s name and trade under its ticker on the Nasdaq. Aphria shareholders will own 62% of Tilray’s stock.
Simon said: “I realised that Aphria needed to expand out of Canada, and merging with Tilray was a great answer because it’s a US-domiciled business with great international assets.”
The new company will sell cannabis products in Canada while also looking to expand into Germany. Tilray’s existing production facility in Portugal will allow tariff-free access to the European Union.
Kennedy said Aphria’s distribution centre for medical prescriptions and cultivation facility made the deal particularly appealing.
“We felt with this deal, we could not only win in Canada, but win in Europe,” he added.
Aphria bought US craft brewer SweetWater Brewing for $300 million last month, giving it a potential distribution point in the US.
Simon said Tilray’s beverage facility in Canada could help Aphria make drinks that contain THC.
The deal will create C$100 million of annual cost savings within a year from completion, the companies said, and Tilray will no longer need to purchase wholesale cannabis from other producers.