What happened
Shares of Tilray Brands (TLRY +1.68%) is up 13.8% this week, according to data provided by S&P Global Market Intelligence, after the company announced its acquisition of several leading beer and beverage brands from Anheuser-Busch InBev (BUD +1.73%).
On Monday, the pharmaceutical, cannabis-lifestyle, and consumer packaged goods specialist revealed an agreement to acquire eight brands from AB InBev (BUD +1.73%), including Shock Top, Breckenridge Brewery, Blue Point Brewing, 10 Barrel Brewing, Redhook, Widmer Brothers, Square Mile Cider, and HiBall Energy.
NASDAQ: TLRY
Key Data Points
So what
The news comes as AB InBev laid off hundreds of employees as part of a corporate restructuring, indicating the brewing giant is obviously feeling the fallout of continued boycotts against its flagship Budweiser and Bud Light brands. The divestiture also effectively signals AB InBev's desire to hone its focus on its three core "global brands," including Budweiser, Corona, and Stella Artois.
"Today's announcement both solidifies our national leadership position and share in the U.S. craft brewing market and marks a major step forward in our diversification strategy," stated Tilray Brands Chairman and CEO Irwin Simon in a press release on Monday. "The expected sales volume of the acquired brands will elevate Tilray Brands to the fifth-largest craft beer business position in the U.S., up from the ninth, with current brands SweetWater Brewing Company, Montauk Brewing Company, Alpine Beer Company, and Green Flash Brewing Company."
Tilray also owns award-winning spirits brand Breckenridge Distillery, as well as the Happy Flower CBD-infused brand of sparkling non-alcoholic cocktails.
Now what
Considering Tilray (formerly named Aphria) previously acquired SweetWater in a cash-and-stock deal for $300 million in 2020, it seems as though it's getting a sweetheart deal this time around; a subsequent SEC filing indicates Tilray is paying AB InBev only $85 million in cash to bring these eight relatively well-known breweries under its wing. Assuming the transaction closes by the end of 2023 as planned, the move will also more than triple the output of Tilray's beer business from around four million cases to 12 million cases annually, generating pro forma craft beer revenue of $250 million.
In the end, as Tilray continues to diversify and build leadership positions in multiple compelling industries, it's no surprise to see its stock rallying in response.
