Aphria (APHA.TO)(APHA) shareholders have voted in favour of the reverse acquisition of rival Canadian pot producer Tilray (TLRY). The decision helps pave the way for the blockbuster deal announced in December to form the world’s largest pot company by revenue.
The required majority of Aphria shareholders backed a motion to approve the deal at a virtual meeting on Wednesday. Aphria shareholders had until 4 p.m. ET on April 12 to cast their vote by proxy. Official results will be posted to SEDAR.
Tilray will hold a shareholder meeting Friday to decide on the deal. That company’s shareholders have until 11:59 PM ET on Thursday to vote by proxy.
Earlier this month, shareholder advisory firms Institutional Shareholder Services and Glass Lewis and Co. threw their support behind the deal. Under the terms, Leamington, Ont.-based Aphria will receive 0.8381 shares of Nanaimo-based Tilray for each Aphria common share.
If the transaction is approved, Aphria's shareholders will own about 62 per cent of the outstanding Tilray shares on a fully diluted basis. Tilray's shareholders will see no adjustment to their holdings. The combined company would assume the Tilray name, and be led by Aphria CEO Irwin Simon. Tilray's chief executive Brendan Kennedy will sit on the company’s nine-person board.
Aphria and Tilray said the new company will be “the world’s largest global cannabis company,” with pro-forma revenue of $874 million for the 12 months prior to the deal’s announcement on Dec. 16, 2020. The combination will solidify Aphria’s dominance in Canada’s recreational market, further outpacing its closest rivals, Canopy Growth (WEED.TO)(CGC) and Aurora Cannabis (ACB.TO)(ACB).
Aphria and Tilray have said they will be “well positioned” for growth in Europe, building on Aphria’s German assets and Tilray’s Portugal facility. In the United States, each company brings consumer packaged goods experience; Aphria, through its SweetWater Brewing business, and Tilray through its Manitoba Harvest Hemp Foods brand.
Aphria and Tilray estimate they will save about $100 million through synergies within two years of the combination. That could help ease pressure for “Tilray 2.0” that is currently being felt across the industry. Pot prices are falling due to a persistent oversupply, and COVID-19 lockdowns are challenging retail stores as well as production facilities.
On Monday, Aphria reported weaker than expe