Two well-known names in the cannabis industry can combine their companies. According to a report released by Bloomberg Tuesday after market hours, citing “sources familiar with the matter”, Tilray (NASDAQ: TLRY) and Aphria (NASDAQ: APHA) are in “advanced discussions” to merge. An announcement on such a deal could come as early as this week, those sources said.
The report says the merged company will likely use the Tilray name, but is led by Irwin Simon, Aphria’s current CEO. In addition, Aphria will likely hold a majority of the seats on the board of directors of the new entity, as current shareholders should hold a 60% stake.
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Another intriguing potential result of a merger between the two companies is that as a combined unit it could move its headquarters to the US. neighbor in the south. Vice President-elect Kamala Harris has said her government will decriminalize cannabis.
If the merger speculation is right and a deal is struck, the newly created entity would also be more balanced than rivals to take advantage of business opportunities abroad. Both companies have relatively strong international operations that can be leveraged if and when the legalization trend expands abroad.
Apparently, Aphria wanted to merge with a pear. BNN Bloomberg previously reported that the company had similar conversations with a Canadian marijuana producer and distributor Aurora Cannabis. However, it seems that these discussions fell apart due to issues related to the possibly merged company.
Investors were excited about the prospect of a merger between Tilray and Aphria. Both stocks beat the rise in the S&P 500 Tuesday, with Tilray closing 6.8% higher and Aphria rising nearly 3.1%.