A pair of Canadian cannabis companies say they’re joining up to form the largest producer in the world based on sales.
Aphria Inc. of Leamington, Ont., and Nanaimo, B.C.-based Tilray Inc., announced early Wednesday they are merging in an all-stock deal.
News of the deal sent the shares of both companies higher in pre-market trading on Nasdaq. Tilray shares were up more than 28 per cent from yesterday’s close, while Aphria was up almost seven per cent.
Under the terms of the deal, Aphria shareholders will get 0.8381 shares of Tilray for each Aphria common share they hold. Once the deal concludes, Aphria shareholders will own approximately 62 per cent of the outstanding Tilray shares, resulting in a reverse acquisition of Tilray.
The merged company will operate under the Tilray name, while its shares will trade on Nasdaq under the TLRY ticker symbol. Aphria will become a unit of Tilray.
The companies said that based on the past 12 months, their combined revenue would have been $874 million. They said they would have had a 17 per cent market share in the Canadian cannabis market — the largest of any licensed producer.
Aphria and Tilray also said they see their union as a way to get more access to the U.S. market. Last month, Aphria said it was buying SweetWater Brewing, an Atlanta, Ga.-based craft brewer with distribution in 27 states, for $300 million US.
Irwin Simon, Aphria’s current chairman and chief executive officer, will take on those same roles in the merged company. Current Aphria directors will occupy seven of the nine seats on the new company’s board of directors, with Tilray getting the other two.