In this week's "Rising High," The Fly's recurring series focused on cannabis stock news, The Fly looks back on a merger close, acquisitions and a research license.
TILRAY, APHRIA CLOSE MERGER: Tilray (TLRY) and Aphria (APHA) announced Monday the completion of its previously announced business combination. The combined company will operate as Tilray and had a market cap of approximately $8.2B based on the closing stock prices on April 30, 2021. The company's class 2 common stock will continue to trade on the Nasdaq Global Select Exchange under the ticker symbol "TLRY" and commenced trading on the Toronto Stock Exchange under the ticker symbol "TLRY" on May. As previously announced, each Aphria shareholder received 0.8381 of a Tilray Share for each Aphria common share held on April 30, 2021. Holders of Tilray shares prior to the completion of the transaction continue to hold their Tilray shares with no adjustment as a result of the transaction. The company expects to deliver approximately $81M of annual pre-tax cost synergies within eighteen months and plans to achieve cost synergies in the key areas of cultivation and production, cannabis and product purchasing, sales, and marketing, and corporate expenses.
SUNDIAL TO ACQUIRE INNER SPIRIT: Sundial Growers (SNDL) and Inner Spirit Holdings (INSHF) announced Wednesday that they have entered into an arrangement agreement pursuant to which Sundial will acquire all of the issued and outstanding common shares of Inner Spirit for total consideration of approximately $131M. The companies said, “The combined company will continue to focus on providing quality cannabis to consumers through a responsible and disciplined approach while creating enduring value for shareholders.” Under the terms of the agreement, Inner Spirit's shareholders will receive, for each Inner Spirit common share held 30c in cash and 0.0835 of a Sundial common share, for total consideration of 39c per Inner Spirit common share. The purchase price of 39c per Inner Spirit common share represents a premium of 54.8% to the 10-day VWAP of Inner Spirit common shares on the Canadian Securities Exchange and a premium of 62.5% to the closing price of Inner Spirit common shares on the CSE on May 4. The transaction has been unanimously approved by the Boards of Directors of Sundial and Inner Spirit and is expected to close early in the third quarter of 2021. The transaction is expected to provide modest synergies and economies of scale due to the different business models of Sundial and Inner Spirit.
HIGH TIDE TO ACQUIRE FABCBD: High Tide (HITIF) announced Monday that it is entering into a definitive agreement pursuant to which it will acquire 80% of Fab Nutrition, operating as FABCBD, for $20.64M and will have a three-year option to acquire the remaining 20% of FABCBD at any time. Founded in 2017 with its headquarters in Milwaukee, Wisconsin, FABCBD had over 1.3M online impressions and an average order value of $91.90 in 2020. FABCBD's founder and sole shareholder, Josh Delaney, will join the High Tide team, as general manager of FABCBD. FABCBD generated 2020 gross margins of 74% and EBITDA margins of 40%, both of which are accretive to High Tide's consolidated profile. The transaction, which is an arm's length transaction, is subject to receipt of required TSX Venture Exchange approval, and other customary conditions of closing and is expected to close during the first half of May. Iy implies an enterprise valuation of $25.8M, representing 6.0x 2020 EBITDA. The consideration for the 80% acquired will be comprised of $8.08M in common shares of High Tide on the basis of a deemed price per High Tide Share equal to the volume weighted average price per High Tide Share on the TSXV for the 10 consecutive trading days preceding closing of the transaction and $12.56M in cash. The cash portion of the transaction will be funded entirely with cash on hand. Upon closing, FABCBD will have approximately $500,000 of cash and non-cash working capital and inventory of approximately $550,000. In addition to the foregoing, FABCBD's founder has agreed to grant High Tide an option to acquire all the remaining shares in FABCBD not held by High Tide, and become the sole shareholder of FABCBD, at an enterprise value equal to the trailing twelve months of EBITDA multiplied by six. The call option will be exercisable at any time for a period of three years following the closing. In addition, High Tide has agreed to grant FABCBD's founder an option to put to High Tide, the remaining shares in FABCBD not held by High Tide at the same enterprise value of the call option. The put option will be exercisable by FABCBD's founder for a period of two years following the first anniversary of the closing.
GREEN THUMB TO ACQUIRE DHARMA: Green Thumb Industries (GTBIF) announced Monday it has signed a definitive agreement to acquire 100% of Dharma Pharmaceuticals, expanding its cannabis distribution network into the Virginia cannabis market. The company said, “Dharma was the first operator to provide medical products to Virginia's patients in 2020 and is strategically positioned to scale in the emerging adult-use market…While Virginia currently allows cannabis access only to qualified medical patients, adult-use sales are expected to commence in January 2024. With a population of nearly 8.5M, Virginia is expected to generate over $1.5B in legal cannabis sales, create significant tax revenue for the Commonwealth and employ thousands of Virginians.” Upon completion of the Acquisition, Green Thumb will have a presence in 13 markets: California, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, New Jersey, New York, Ohio, Pennsylvania and Virginia. As one of only five licenses in the Virginia medical cannabis market, Dharma is licensed to grow, process and retail cannabis directly to consumers. The acquisition includes an existing production facility and retail dispensary located in Abingdon, VA. Green Thumb will also maintain the opportunity to open up to five additional retail locations in the Commonwealth. Completion of the acquisition is subject to customary regulatory approvals and is expected to close in the second half of 2021.
ALEAFIA SECURES HEALTH CANADA LICENSE: Aleafia Health (ALEAF) announced Monday it has secured a Health Canada Research License for its cannabis product manufacturing and innovation Center in Paris, Ont. The license allows the company to conduct human sensory analysis and palatability trials, evaluating the taste, touch, smell and sight of its growing portfolio of differentiated medical and consumer cannabis products. Aleafia Health is currently developing a number of new product formats and line extensions to complement its existing cannabis portfolio of dried flower, edibles, sublingual strips, soft gels, extracts, and vape cartridges. The company intends to conduct sensory assessment studies consistently during product development, allowing human panels to evaluate objective product characteristics, and evaluate preference between comparable products.
OTHER CANNABIS STOCKS: Other publicly-traded companies in the space include Acreage (ACRHF), Akerna (KERN), Aurora Cannabis (ACB), Auxly Cannabis (CBWTF), Body and Mind (BMMJ), CannTrust (CTST), Canopy Growth (CGC), Canopy Rivers (CNPOF), Clever Leaves (CLVR), CordovaCann (LVRLF), Cresco Labs (CRLBF), Cronos Group (CRON), CV Sciences (CVSI), CURE Pharmaceutical (CURR), Delta 9 (VRNDF), Emerald Health (EMHTF), Fire & Flower (FFLWF), FluroTech (FLURF), General Cannabis (CANN), Greenlane (GNLN), GrowGeneration (GRWG), Harborside (HBORF), Hemp (HEMP), HempFusion (CBDHF), HEXO (HEXO), IM Cannabis (IMCC), India Globalization Capital (IGC), Indiva (NDVAF), Innovative Industrial Properties (IIPR), Khiron Life Sciences (KHRNF), Liberty Health Sciences (LHSIF), Lowell Farms (LOWLF), MediPharm Labs (MEDIF), MedMen Enterprises (MMNFF), MJardin Group (MJARF), Neptune Wellness (NEPT), Omnicanna (ENDO), Organigram (OGI), Planet 13 (PLNHF), Skye Biosciences (SKYE), Sproutly (SRUTF), Stem Holdings (STMH), Sunniva (SNNVF), Supreme Cannabis (SPRWF), Valens (VLNCF), TerrAscend (TRSSF), Tetra Bio-Pharma (TBPMF), Trulieve (TCNNF), Village Farms (VFF), Vireo Health (VREOF), WeedMD (WDDMF), Wildflower Brands (WLDFF), YSS Corp. (YSSCF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).
Aurora Cannabis
-0.295 (-3.36%)
CV Sciences
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CannTrust
+
Canopy Growth
-1.09 (-4.29%)
Cronos Group
-0.26 (-3.30%)
Trees Corporation
+
IGC Pharma
-0.095 (-6.15%)
Trulieve Cannabis
-0.44 (-1.06%)
ZYNE
+
Aleafia Health
+
Green Thumb Industries
+0.8227 (+2.67%)
High Tide
+
Inner Spirit Holdings
+
Sundial Growers
+
APHA
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Tilray
-1.42 (-8.93%)