Say hello to what has become, at a stroke, a dramatically larger marijuana company: the new version of Tilray (TLRY). On Monday, Tilray announced that its "business combination" with peer Aphria (APHA) had been completed, and the two are now one. The news comes one business day after shareholders of the previous version of Tilray voted in favor of the deal.
In reality, this is Aphria taking over Tilray. In an all-stock deal agreed to last December, each Aphria share held as of April 30 was swapped for 0.8381 of a Tilray share. Aphria's CEO Irwin Simon is taking over that role with the reconstituted Tilray, and has also become the chairman of the new company's board of directors. To mark the new phase of its existence, Tilray has also changed its corporate logo.
Then and now, Aphria's (now Tilray's) leadership has touted many benefits of the two companies coming together.
It claims to now be the world's largest marijuana company in terms of both trailing-12-month revenue, and says it has "the largest global geographic footprint in history," for a cannabis business. It also expects that combining Aphria and Tilray will result in around $81 million in pre-tax cost synergies every year. Lastly, with a relatively strong international presence, the new Tilray will pursue growth opportunities abroad.
Now that the deal is done, the hard part comes: Tilray 2.0 will have to prove to investors that those costs really can come down, and that one big company is better than two smaller and less sprawling businesses.
That might not be an easy sell. On Monday, Tilray's shares closed 7.2% lower, against the 0.3% rise of the S&P 500 index.