Here Is What Will Be Decided At The Aphria & Tilray “MegaMerger” Meeting Next Month

Next month, Aphria Inc. (TSX: APHA) (Nasdaq: APHA) will have a special shareholder meeting to vote on the previously announced merger with Tilray, Inc. (Nasdaq: TLRY).

We expect shareholders to approve the business combination and believe the market has already priced in this outcome. During the last month, both Aphria and Tilray have been in rally mode and we will monitor how the shares continue to perform ahead of the meeting.

The April 14^th Aphria special shareholder meeting was announced after both companies received the necessary regulatory approvals to complete the proposed business combination and we are favorable on how the transaction has advanced. Tilray will host a special shareholder meeting on April 16^th and we are excited for the merger to be completed.

The closing of the mega-merger is expected to make the combined company the world’s largest cannabis company. We are favorable on how the merger will improve financial flexibility for the combined company through the strength of the balance sheets and the amount of access it will have to capital.

Aphria Chairman and CEO Irwin D. Simon will be the Chairman and CEO of the combined company. We are favorable on his experience and his track record while he was at the helm of Aphria and are bullish on the direction he is bringing the business. Under his leadership, the combined company is expected to focus on investing and acquiring strategic US assets that will prove to be accretive and we are favorable Simon’s track record of acquiring businesses.

The combination of Aphria and Tilray is expected to have a strong financial profile, low-cost production assets, leading brands, a vast distribution network in North America and abroad, and strategic partnerships. Some points to highlight on the combined company are the following:

1. The combined company has US$685 million of pro forma revenue for the last 12 months, making it the world’s largest cannabis company
2. The combined company is expected to have the strategic footprint and operational scale necessary to compete more effectively
3. The combined company will have low-cost cultivation, processing, and manufacturing facilities as well as a complete portfolio of branded cannabis 2.0 products in Canada.
4. The combined company is expected to be a leader in the European Union (EU) and we are favorable on the types of assets that are owned by it
5. The combined company is positioned to capitalize on the US market once federal legislation changes. The business will have a strong consumer packaged goods presence and infrastructure with two strategic pillars (SweetWater and Manitoba Harvest)
6. The combination of Aphria and Tilray is expected to deliver approx. US$78 million of annual pre-tax cost synergies within 24 months of completion

The combination of Aphria and Tilray is expected to be a competitor to Canopy Growth Corporation (WEED.TO) (CGC), which has been considered to be a global leader for several years. Going forward, we expect to learn more about how Canopy Growth plans to maintain a leadership position in the global cannabis market and would not be surprised if it reported other significant acquisitions or partnerships.

Broker-dealers have become increasingly favorably on the combination of Aphria and Tilray and we will monitor how the story evolves ahead of the April meeting. If you are interested in learning more about the combination of Aphria and Tilray, please send an email to support@technical420.com with the subject “Aphria and Tilray” to be added to our distribution list.

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Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

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