The next week will be significant for the legal cannabis industry as Tilray, Inc. (TLRY) plans to conduct a special shareholder meeting to vote on the pending mega-merger with Aphria, Inc. (APHA.TO) (APHA).
So far this year, we have highlighted the potential of the combined company in a series of articles. When compared to its peers, we believe the combination of Aphria and Tilray will have the most attractive leverage to strategic international markets. We also expect the combined company to capture additional market share of Canada’s medical and recreational cannabis market.
We believe the combined company is more attractive than the sum of its parts and expect the merger to create an operator that can contend with Canopy Growth Corporation (WEED.TO) (CGC), a leading Canadian Licensed Producer (LP). Some of the reasons for our thesis on the potential of the combined company include but are not limited to the following:
- Aphria and Tilray own strategic US assets and the combined company will be prepared to capitalize on the US once regulations allow for it
- The combined company’s balance sheet is much stronger than the sum of its parts and we expect it to make additional strategic investments and acquisitions
- The expertise of the combined management team is diverse, and we are favorable on the track record that each executive brings to the team
After the merger was reported, both Aphria and Tilray started to rally. During the last two months, the cannabis sector has been under pressure. Aphria and Tilray have been impacted by the recent downturn and we will continue to monitor price movements ahead of the April 30th special shareholder meeting.
We expect to see the merger approved by Tilray and believe the recent changes to the planned shareholder vote are positive for Aphria. Earlier this month, Tilray lowered the percentage of outstanding shares that need to be present to have quorum and this decision received mixed responses from the market.
After Tilray shareholders vote on the merger, we expect the deal to be completed shortly after. If you are interested in learning more about the merger, please send an email to email@example.com with the subject “Aphria and Tilray” to be added to our distribution list.
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