Meet the World’s Largest Cannabis Company

Cannabis leaves of a plant on a dark background

This year has been a relatively hot one for big deals in every sector. Indeed, the cannabis sector has been no exception.

The recent merger of Tilray (NASDAQ:TLRY) and Aphria is one that’s made a lot of headlines of late. And for good reason.

Let’s delve into the details of the founding of Canada’s largest pot company and what it means for long-term players.

A merger to look out for

Aphria and Tilray are en route to creating the largest cannabis company in the world in terms of sales.

A nod from shareholders of both parties moved this deal one step closer. The newly formed company is set to operate under the name of Tilray, while Aphria has a 62% ownership of the combined entity.

Pooling resources significantly increases the chances of both company’s success in a growing industry. Aphria shareholders will get 0.8381 of Tilray share per Aphria share. Aphria’s shareholders gave the green light to this merger on April 14. A total of 99.38% of investors present in the meeting voted for reverse acquisition.

In terms of production quantity and revenue from pot sales, Aphria is way ahead of Tilray. Aphria’s total revenue stands at $600 million, while that of Tilray is $200 million. However, Tilray reported a net loss of $330 million and Aphria suffered a net loss of $585 million in 2020.

Why is this a big deal?

Substantial competition in the cannabis space is requiring companies to consider how to get larger. Consolidation is one of the key ways companies are looking to grow right now.

Both companies have had their eye on expanding past the Canadian market for some time. The hope is that this larger entity will have a better shot of penetrating the U.S. market when the time comes. While U.S. multi-state operators currently have the lead, investors are likely to focus on companies with the best shot of global growth. Tilray’s new value proposition may therefore be enticing to investors looking at cannabis stocks for the first time.

The combined entity hopes to save approximately $100 million a year via the completion of this deal. As cannabis players search for profitability, this will be a big deal if synergies can be realized.

Bottom line

The Tilray-Aphria merger is one I think investors in the cannabis space need to watch closely. If the company is able to make strides forward into the U.S. market and improve its bottom line, this stock could take off.

However, being bigger doesn’t necessarily mean this stock will be better. Time will ultimately tell how this mega cannabis player will do.

Like this cannabis play? Here’s another one to consider right now:

Should you invest $1,000 in Aurora Cannabis right now?

Before you consider Aurora Cannabis, you may want to hear this.

Motley Fool Canadian Chief Investment Advisor, Iain Butler, and his Stock Advisor Canada team just revealed what they believe are the 10 best stocks for investors to buy right now… and Aurora Cannabis wasn’t one of them.

The online investing service they’ve run since 2013, Motley Fool Stock Advisor Canada, has beaten the stock market by over 3X. And right now, they think there are 10 stocks that are better buys.

Learn More Today!

More reading

Fool contributor Chris MacDonald has no position in any of the stocks mentioned.

The post Meet the World’s Largest Cannabis Company appeared first on The Motley Fool Canada.

Source: The Fool
Meet the World’s Largest Cannabis Company
The Fool

The Motley Fool
Contributor at
The Motley Fool is dedicated to helping the world invest — better. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, mutual funds, and premium investing services.

In all we do, we take a different approach.

We believe – and have proven over decades – that the individual investor can beat the market.

We believe that anyone can do it, even if they don’t have a lot of time or money to devote to investing.

We believe in a long-term outlook, helping people build wealth over time.

We believe that the person best positioned to take care of your financial future is you.

And we work tirelessly on behalf of our hundreds of thousands of members who are enjoying the opportunities that come with having enough money to do the things that matter to them.

While we are headquartered in Alexandria, Va., The Motley Fool advocates for the individual investor around the globe with offices in the UK, Australia, Canada, Singapore, and Germany.

Related News