Full Answer
Should you buy Aphria stock before or after the Tilray merger?
So, buying Aphria now and shorting Tilray is a good short-term bet for making a profit when the merger completes. Shorting Tilray shares allows investors to borrow and sell the stock now, and then buy the stock later to return it to the lender.
What does the Aphria-Tilray merger mean for investors?
This price difference allows investors to buy the stock of the target company at a discount and make profits when the merger is completed. According to the merger agreement, while the combined entity will operate under the Tilray name, Aphria shareholders will own 62% of the new company.
Can Aphria make its mark in the European medical cannabis market?
Aphria has a good hold in the European medical cannabis market, thanks to its German subsidiary, CC Pharma. It earns around 98% of its distribution revenue from it. Coupled with Tilray's operations in Portugal, the new entity can easily make its mark in Europe.
Can Aphria and Tilray make their mark in Europe?
Both Aphria and Tilray already have strong footings in Canada. Aphria has a good hold in the European medical cannabis market, thanks to its German subsidiary, CC Pharma. It earns around 98% of its distribution revenue from it. Coupled with Tilray's operations in Portugal, the new entity can easily make its mark in Europe.
What happened to my Aphria shares?
What will happen to Aphria once the arrangement is completed? Once completed, Tilray will acquire all outstanding Aphria Shares and Aphria will become a wholly-owned subsidiary of Tilray. Aphria Shares will be delisted from the TSX and NASDAQ.
Did Aphria go out of business?
and Aphria Inc. announced the closing of their merger on Monday, creating the world's biggest weed company measured by revenue. The companies are expecting the new combined company — which will operate as Tilray — to generate pretax cost-saving synergies of $81 million within 18 months of closing.
Will Aphria be delisted?
Aphria's stock also trades on Nasdaq, but it will be delisted from that exchange on May 3. The deal is expected to close by the end of the second quarter of 2021.
Will Aphria stock convert to Tilray?
The company will continue to trade on the Nasdaq Global Select Exchange under the symbol "TLRY" and will commence trading on the Toronto Stock Exchange under the symbol "TLRY" on May 5. Under the terms, Aphria shareholders receive 0.8381 of a Tilray share for each common share of Aphria. Aphria's CEO Irwin D.
Does Aphria own Tilray?
Aphria Inc. Upon completion of the Transaction, Aphria shareholders will own approximately 62 percent of the outstanding Tilray shares on a fully diluted basis, resulting in a reverse acquisition of Tilray by Aphria.
What is Aphria called now?
TilrayLast week, Tilray (TLRY) and Aphria formally merged to form a new company. It instantly became the industry leader in the Canadian pot market.
How many Tilray shares for Aphria?
0.8381 Tilray sharesUnder the deal, structured as a reverse acquisition of Tilray, each Aphria shareholder will receive 0.8381 Tilray shares for each Aphria share held.
Why is APHA delisted?
The Leamington, Ontario-based company's primary listing will remain on the Toronto Stock Exchange, where, like the NYSE, it trades as APHA. Struggling Canadian cannabis firm CannTrust was delisted from the NYSE in April after seeking a creditor protection order.
Who owns Aphria?
TilrayAphria / Parent organizationTilray Brands, Inc. is a global pharmaceutical, cannabis-lifestyle and consumer packaged goods company, incorporated in the United States, headquartered in New York City, New York. Tilray also has operations in Canada, Australia, New Zealand, and Latin America, with growing facilities in Germany and Portugal. Wikipedia
Is APHA a buy or sell?
A P/B of 1 means it's selling at its per share book value....Momentum Scorecard. More Info.Zacks RankDefinitionAnnualized Return1Strong Buy25.08%2Buy18.56%3Hold10.15%4Sell5.79%2 more rows
Did Tilray merger with Aphria?
Tilray-Aphria merger closes, expanded company to control biggest share of Canadian pot market. Canadian cannabis companies Tilray Inc. and Aphria Inc. say their merger deal has now closed after receiving approval from shareholders of both companies.
When Aphria and Tilray merger?
The mega-merger deal between Canadian cannabis companies Aphria and Tilray (TLRY -6.89%) was the highlight of the marijuana industry this year. The deal closed on May 3 and the "new" Tilray was formed, and in the process, became the world's largest cannabis company by revenue.
The cannabis specialist's stock tumbled with the broader markets last month. Should investors take advantage of this weakness?
George Budwell has been writing about healthcare and biotechnology companies at the Motley Fool since 2013. His primary interests are novel small molecule drugs, next generation vaccines, and cell therapies.
What happened
Shares of Canadian pot giant Aphria ( NASDAQ:APHA) lost 16.8% of their value in March, according to data from S&P Global Market Intelligence. The cannabis company's stock fell largely as a result of the marketwide downturn caused by the novel coronavirus.
So what
Early on in the month, Aphria's shares were on the same dreadful trajectory as its closest cannabis peers. In fact, Aphria's stock was down by as much as 38% halfway through the month. The company's saving grace turned out to be a positive note from Bank of America analyst Christopher Carey.
Now what
Is Aphria's stock worth buying after this March swoon? It all depends on your tolerance for risk and investing timeline. The bad news is that the legal marijuana industry is still facing a number of hurricane-force headwinds, and these issues won't be resolved overnight.
Solid business performance
First of all, while the coronavirus pandemic has been wreaking havoc, Aphria has been gaining market share in Canada. As of the third quarter of 2020, the company holds 77% of the market share on all brands of vaping products in Ontario. In Quebec, e-commerce sales of Aphria's marijuana products grew by 200%.
Takeaways for investors
Investors may argue, however, that Aphria is risky because the company pulled its earlier full-year guidance for fiscal 2020 due to the pandemic on April 15. In doing so, the company claimed significant sales uncertainty and potential impacts in the event the EU closed its borders to trade to halt the spread of the coronavirus.
Merger arbitrage in the Tilray and Aphria merger
Previously, I pointed to the juicy merger arbitrage in Tilray and Aphria stocks. According to the merger terms, Aphria stockholders will get 0.8381 Tilray shares for each Aphria share. Theoretically, Aphria stock should trade at 0.8381x of Tilray stock.
Aphria stock's valuation
Currently, Aphria stock trades at an LTM (last-12-month) EV-to-sales multiple of 12x. While the multiple is almost five times what we saw a year ago, it's still a fraction of the 162x LTM EV-to-sales multiple that we saw at the peak in 2018. Also, Aphria stock is trading at a discount to some of its peers.
Is APHA stock a buy after the crash?
The marijuana industry's outlook is strong. The Biden administration is expected to push for the federal legalization of marijuana, which would help lift adult-use marijuana sales in the country. Medical marijuana is also gaining traction globally.
What is the aphria-tilray merger?
Currently, investors are keen to cash in on the Aphria-Tilray merger arbitrage opportunity. A merger arbitrage occurs when the stock price of the target company trades below the proposed acquisition price, mostly because of uncertainty around whether the deal will succeed or fall through. This price difference allows investors to buy the stock ...
How much of Tilray does Aphria own?
But the most important point to note is that each Aphria shareholder will get 0.8381 shares of Tilray.
What is shorting tilray stock?
Shorting Tilray shares allows investors to borrow and sell the stock now, and then buy the stock later to return it to the lender. In this way, the investor is essentially betting that the stock price will sink, allowing them to make a profit from the difference between the buying price and the selling price.
How much is the cannabis market worth in 2027?
The global cannabis market is expected to grow at a compound annual growth rate (CAGR) of around 17.8% to be worth $65.1 billion by 2027. Knowing this, I think it's smart to invest in a growing pot stock and hold it for the long term in order to reap all the possible benefits.
What happens if a merger doesn't go through?
But there are also risks to an arbitrage -- like if the merger doesn't go through, the share price will drop. Additionally, if more people opt to take advantage of the arbitrage, the opportunity might vanish altogether. However, there is another way to make money out of this merger deal (if you have the patience).
Is Aphria a long game?
Aphria and Tilray are playing the long game. No doubt, the arbitrage opportunity creates a short-term advantage until the merger closes. But stock investments are almost always fruitful when played out for the long run. Cannabis is an evolving, quickly growing industry.
Markets Plunge
There’s been something close to panic selling in U.S. stocks since late January, and particularly in the last few sessions. The S&P 500 lost 11% of its value last week alone, its worst performance since the beginning of the financial crisis in 2008.
APHA Underperforms
To be sure, I’m likely a bit biased: I’ve called Aphria stock my pick in cannabis, even as I’ve also written that the sector as a whole could see more selling. But that potential bias aside, the relative weakness in APHA still is somewhat surprising.
Did Earnings Undercut Aphria Stock?
It’s possible that January’s earnings report has had an impact on Aphria stock. But if so, that impact was delayed.
Good News Since
At the end of January, Aphria closed a 100 million CAD investment with an unnamed investor. That investor paid 7.12 CAD (at the time, $5.38) per unit, which included one share and one-half of a warrant at 9.26 CAD ($7.00).
An Unjustified Sell-Off?
And so, this fade in Aphria stock simply seems to have gone too far. To be sure, that doesn’t necessarily mean APHA is a buying opportunity.
Don't let its fourth-quarter net loss discourage you -- there are a lot of reasons to buy
Sushree is a new member of the Fool family, keen on writing about the cannabis and healthcare sector and also has five years of experience writing on real estate, consumer sector, and macroeconomic topics. She holds a bachelor’s degree in business management, specializing in finance, and also a CFA Level 2 candidate.
1. Aphria's revenue numbers are outstanding
Aphria cultivates and sells medical and recreational cannabis products, with a compelling product portfolio that includes brands like its namesake Aphria, Broken Coast, Solei, RIFF, and Good Supply.
2. It has a track record of consistent profitability
Strength in Aphria's medical and adult-use market has helped it reach higher revenue and profits. In its recent fourth quarter, ended May 31, Aphria reported consolidated adjusted EBITDA (earnings before income, tax, depreciation, and amortization) of CA$8.6 million. That's a stunning 49% increase from CA$5.7 million in the year-ago quarter.
3. It has a strong leadership team
I attribute Aphria's strong revenue numbers and consistent profitability to its asset-light business model under the leadership of CEO Irwin Simon, who took over the reins as interim CEO in March 2019. Before that, he served as the independent chair of its board of directors.
What does 2020 look like for Aphria?
Aphria has already created a stronghold with its medical and recreational cannabis operations in Canada, Germany, Italy, Malta, Colombia, and Argentina.
