Canada/USA: Is AB InBev the loser of the new cannabis merger?

Tilray and Aphria, two leading cannabis companies from Canada announced today to combine their businesses and create the world’s largest global cannabis company based on pro forma revenue. The  merger in an all-share deal will see Aphria’s shareholders receive approximately 62 percent of the outstanding Tilray shares on a fully diluted basis, resulting in a reverse acquisition of Tilray. The merged company will operate under the Tilray name, while Aphria will become a unit of Tilray.

Tilray and AB InBev announced two years ago to establish a research partnership focused on non-alcohol THC and CBD beverages. The partnership between Tilray’s Canadian adult-use cannabis subsidiary High Park Company and AB InBev’s subsidiary Labatt Breweries of Canada is geographically limited to Canada. Decisions regarding the commercialization of the beverages would be made in the future, the companies said at that time. (, 21.12.2018)

Tilray’s new partner Aphria, on the other hand has already made the first steps into the production of cannabis infused beverages. Last month, Aphria announced to acquire SweetWater Brewing Company, one of the top fifteen craft breweries in the USA. (, 4.11.2020)

The combined company of Tilray and Aphria said in today’s press statement that “it will be well-positioned to pursue an accelerated rate of growth in the Canadian and the U.S. beverage industries by leveraging SweetWater’s innovation, knowledge, and expertise to introduce adult-use cannabis brands via craft beers and other beverages. This includes leveraging both companies proven distribution networks in Canada to sell SweetWater’s 420 cannabis lifestyle brand in Canada.”

It has to be seen, how Tilray’s former joint venture with AB InBev will fit into the new structure, as it was not mentioned with one word in the new announcement.

Tilray and Aphria expect cost savings of about CND 100 million (USD 78m) in key areas, including cultivation and production, cannabis and product purchasing, sales and marketing and corporate expenses. Combined revenue will be CND 874 million (USD 685m) based on the past 12 months.

Aphria's Leamington operations will provide additional volume for Tilray's brands and will replace the need for Tilray to buy wholesale cannabis from other licensed producers. Tilray's facility in London, Ont., will provide Aphria with excess capacity to boost output, including their branded edibles and beverages.

The combined company hopes also to exand its business in Europe which includes Aphria’s German medical cannabis distribution footprint and Tilray’s 2.7 million square foot European EU-GMP low-cost cannabis cultivation and production facility in Portugal. In Germany, Aphria’s wholly-owned subsidiary, CC Pharma GmbH, will provide the combined company with distribution capabilities for the Aphria and Tilray medical cannabis brands to more than 13,000 pharmacies. In Portugal, Tilray’s EU-GMP cultivation and production facility will provide the combined company with the capacity to cultivate and produce medical cannabis products in order to meet international demand and has export capabilities, which provides tariff-free access to the EU.

Upon completion of the arrangement, Aphria’s current Chairman and Chief Executive Officer, Irwin D. Simon, will lead the Combined Company as Chairman and Chief Executive Officer. The board of directors will consist of nine members, seven of which, including Mr. Simon, are current Aphria directors and two of which will be from Tilray, including Tilray’s current CEO Brendan Kennedy, and one of which is to be designated.

“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,” said Mr. Simon. “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.”

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