Aphria, Tilray shares jump after news of cannabis companies discussing mergers

The shares in the Canadian cannabis companies Aphria Inc. and Tilray Inc. late trading skyrocketed on Tuesday after a report that the companies are in advanced talks to merge.

BNN Bloomberg reported late Tuesday that Aphria APHA,
+ 3.05%

+ 2.48%
and Tilray TLRY,
+ 6.78%
could announce a merger as early as this week and discuss the combined company’s move to the US, with the news based on unnamed sources. The same news source reported over the summer that Aphria was in talks to merge with Aurora Cannabis Inc. ACB,
+ 6.80%,
but that deal never materialized.

BNN reported that Aphria would be the dominant entity in the merger in the current discussions, retaining 60% ownership of the combined entity. Aphria Chief Executive Irwin Simon would lead the merged company, while Tilray CEO Brendan Kennedy would likely serve on the board of directors rather than retain an executive role, the report noted, noting that the deal could still fall apart .

Canadian cannabis stocks rose as the country became the first industrialized country to legalize recreational marijuana sales, but fell sharply after companies fell short of outrageous growth expectations. Stocks have struggled back last month as hopes of legalization in the US rose after the November election.

See Also: Aphria Agrees to Buy American Craft Beer Maker Sweetwater, Known for Its ‘420’ Brand Beers

Aphria was one of the first cannabis companies to face a bill, shaking up the management team in early 2019 after short sellers publicly questioned some of the deals top executives had struck. Tilray was the first major pot company to go public on a US stock exchange, and its stock rallied to over $ 100 not long after it went public in July 2018, before plunging significantly.

Both stocks rose more than 15% in after-hours trading on Tuesday following the release of the report. Tilray closed with a 6.8% gain at $ 7.87, while Aphria added 3.1% to $ 8.12 during the regular session.