Portion of CIBC updated Opinion. EQUITY RESEARCH April 12, 2021
Earnings Update APHRIA INC.
Quorum Questions: Still Expect Deal To Close, Softness May Create Buying Opportunity Our Conclusion Today’s focus from management on voter encouragement suggests that there is at least some uncertainty on whether the proposed APHA-TLRY deal passes on its first attempt. We expect the biggest hurdle is attaining the required quorum for TLRY (50.1% of shares outstanding must vote). To be clear, we believe the deal eventually closes and creates an industry leader with potential for $100MM of synergies and a highly profitable entity with a leading share in Canada and Europe. We view today’s sell-off as overdone. This continues to be an industry that thrives on brick & mortar sales, and store restrictions have had a meaningful impact, which we expect to ebb by the summer. We reduce our price target to $23 (from $28), and APHA is rated Outperformer.