05 Apr 2021
Earlier today, Aphria Inc. (TSX: APHA) (Nasdaq: APHA) received a positive nod from Institutional Shareholder Services Inc. (ISS) and Glass Lewis as it relates to the proposed mega-merger with Tilray, Inc. (Nasdaq: TLRY).
Since initially learning about the business combination, we have been bullish on the combined company due to the assets that are owed by each operator. From Canada to the European Union, Aphria and Tilray own strategic domestic and international cannabis assets. Going forward, we are bullish on the growth profile of the combined company and find the risk-reward to be favorable for both operators.
ISS and Glass Lewis are leading independent proxy advisory firms that provide voting recommendations to institutional shareholders. We find the transaction to be strategic and are bullish on the potential value-creation opportunities associated with it. Today, we want to provide 7 important takeaways from ISS and Glass Lewis’ view on the transaction and believe that our readers need to be aware of this.
7 Key Takeaways from ISS and Glass Lewis
The business combination is expected to improve the scale of the platform in several leading legal cannabis markets
The combined company is anticipated to deliver US$78 million of pre-tax cost synergies within 24 months of the deal closing
The combined company is expected to see vast improvements in cultivation and production
Tilray-Aphria will become the world’s largest cannabis company (based on pro forma revenues of each company for the twelve-months prior to the merger announcement)
As it relates to Europe, the combined company should have a advantage due the number of in-country cultivation and distribution licenses that it owns
The combined company will be able to export medical cannabis products within the EU on a tariff-free basis and are favorable on the distribution and cultivation assets that are owned by the operators
The recent rally by Aphria and Tilray could be related to the belief that the expected synergies and benefits of the transaction are achievable
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