Aphria and Tilray, already two of the largest companies in the cannabis space, announced recently that they are going to merge, forming a massive cannabis superpower as 2021 starts to unfold. In light of the merger, Aphria is helping to clear the air on what the arrangement means for shareholders, helping them understand what lies ahead once all the pieces of the puzzle are in place.
When the merger is finally closed, Tilray is going to issue new shares in exchange for all outstanding Aphria shares. As a result, Aphria stockholders will get approximately 62% of the total equity in Tilray, with the latter’s existing shareholder base controlling the remaining 38%. Aphria’s current chairman and CEO, Irwin D. Simon, will be the chairman and CEO of the newly-formed company, which is going to carry the Tilray name. He will lead a board comprised of nine directors, which will also include six current directors of Aphria.
Aphria explains to its shareholders, “When the transaction is completed, each of your Aphria common shares (“Aphria Shares”) will be replaced with 0.8381 shares of newly issued common stock of Tilray (“Tilray Shares”). You will no longer own any Aphria Shares, but instead will own Tilray Shares. As an example, if you owned 1,000 Aphria Shares on the closing day of the transaction, after the closing, you will own 838 Tilray Shares (since no fractional shares are issued). See the next question for how to value your Aphria Shares in the transaction.”
The new Tilray will be listed on NASDAQ and will trade in US dollars. The company will apply to be listed on the Toronto Stock Exchange (TSX), as well, where it will trade in Canadian dollars. The company adds, “Aphria and Tilray will work with the TSX to determine if Tilray will be included in the S&P/TSX Composite Index following completion of the transaction.”
If there are no problems with the merger, the closing should take place in the second quarter of 2021. However, shareholders will be given an opportunity to vote on the deal, with Aphria stating, “[Shareholders] will have a chance to vote on the transaction at a meeting of shareholders. The transaction must be approved by at least two-thirds of the votes cast by Aphria shareholders. Full details of the transaction will be included in a management information circular of Aphria to be mailed to Aphria Shareholders in the coming weeks.”