Aphria Announces Strategic Entry Into The United States With An Agreement To Acquire Sweetwater Brewing Company

SweetWater’s Portfolio of Beer Brands, Including the Flagship 420 Brand, Aligns with a Cannabis Lifestyle and Provides a Scalable Platform for Expansion into the U.S. and Canada

Accretive Acquisition Significantly Expands Aphria’s Addressable Market and Diversifies Product Offerings

Establishes an Infrastructure in the U.S. Enabling Accelerated Entry into U.S. Cannabis Market, Subject to Federal Legalization

Aphria to Host a Conference Call and Webcast on November 4, 2020, at 4:15 pm EST.

CANADA:  Aphria Inc., a leading global cannabis company inspiring and empowering the worldwide community to live their very best life, today announced it has entered into an agreement of merger and acquisition to acquire SW Brewing Company, LLC. SweetWater Brewing Company is one of the largest independent craft brewers in the United States  based on volume. Beginning with the flagship 420 beverage offerings, SweetWater has created an award-winning lineup of year-round, seasonal and specialty beers, a portfolio of brands closely aligned with a cannabis lifestyle. The approximately USD $300 million acquisition has been unanimously approved by Aphria’s Board of Directors and is expected to close before the end of December 2020. Aphria expects this acquisition to be immediately accretive to EBITDA and diluted earnings per share. All dollar amounts in the press release are expressed in U.S. dollars unless otherwise noted.

Founded in 1997 by Freddy Bensch, SweetWater has broad consumer appeal and has established strong distribution across 27 states plus Washington, D.C. and has ample capacity to support distribution efforts into new geographies, with limited capital expenditure. From its state-of-the-art brewery in Atlanta, Georgia, SweetWater produces a balanced variety of year-round and seasonal specialty craft brews, with SweetWater beverages available in approximately 29,000 off-premise retail locations ranging from independent bottle shops to national chains. SweetWater’s significant on-premises business allows consumers to enjoy its varietals in more than 10,000 restaurants and bars.

In addition to its traditional distribution footprint, SweetWater 420 Extra Pale Ale and IPA are served on all Delta flights nationwide plus internationally totaling more than 50 countries across six continents which have served to extend SweetWater’s brand reach on both a national and international level. The Company also hosts an annual music festival, “SweetWater 420 Fest,” that has evolved into one of the largest and most anticipated music festivals in the U.S., increasing brand awareness nationwide. In 2019, the 420 Strain G13 IPA became the top new craft brand in the U.S. in the first 12 months after its launch. In addition to branding, SweetWater’s various 420 strains of craft brews use terpenes and natural hemp flavours that, when combined with select hops, emulate the flavours and aromas of popular cannabis strains, to appeal to a loyal consumer base that made the 420 Strain G13 IPA their #2 best-selling beer and #1 best-selling new craft beer in the U.S. For the year ended December 31, 2019, SweetWater Brewing Company generated net revenue and adjusted EBITDA of $66.6 million and $22.1 million, respectively, and production volume increased 7% year-over-year to nearly 261,000 barrels, twice the growth rate of the craft beer market nationally, according to the Brewers Association.

“Our strong balance sheet and access to capital have enabled us to enter the U.S. through this strategic and accretive acquisition. We will establish and grow our U.S. presence through SweetWater’s robust, profitable platform of craft brewing innovation, manufacturing, marketing and distribution expertise. At the same time, we will build brand awareness for our adult-use cannabis brands, Broken Coast, Good Supply, Riff and Solei, through our participation in the growing $29 billion craft brew market in the U.S. ahead of potential future state or federal cannabis legalization,” said Irwin D. Simon, Aphria’s Chairman and Chief Executive Officer. “We look forward to building upon the strengths of each of our respective and complementary brands, diversifying our product offering, broadening our consumer reach, and enhancing loyalty with consumers.”