Globe Article Gets it Right..Its about Costs
Globe says Aphria-Tilray merger aimed at cutting costs
2020-12-17 08:57 ET - In the News
The Globe and Mail reports in its Thursday edition that two of Canada's largest cannabis companies are merging in an all-share deal aimed at cutting costs and positioning the combined entity for potential changes to marijuana laws in the United States and Europe.
The Globe's Mark Rendell writes that the merger of Aphria and Tilray, announced Wednesday, is the first major takeover in Canada since recreational cannabis was legalized in 2018.
The combined company, which will continue under the Tilray name, will have the largest cannabis sales footprint in the country and an implied equity valuation of close to $5-billion. Current Aphria shareholders will control roughly 62 per cent of the company.
The Canadian cannabis sector is widely seen as ripe for consolidation. The deal between Leamington, Ont.'s, Aphria and Nanaimo, B.C.'s, Tilray is aimed at sharing costs.
They want savings of $100-million over the next two years by combining production assets, sales groups and reducing expenses.
Aphria's executives spoke with several potential partners earlier in the year.
In the end, a deal with Tilray made the most sense, chief executive officer Irwin Simon said, because there is not a significant overlap in assets.
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