Aphria And Tilray Combine To Create Largest Global Cannabis Company With Pro Forma Revenue Of C$874 Million (US$685 Million)

Complementary, Scalable Medical and Adult-Use Cannabis Businesses Strengthen Leadership Position in Canada; Expands U.S. and International Reach through World-Class Cultivation, Manufacturing, Diversified Product Portfolio and Distribution Footprint

CANADA: Aphria Inc., a leading global cannabis company inspiring and empowering the worldwide community to live their very best life, and Tilray, Inc. , a global pioneer in cannabis research, cultivation, production and distribution, today announced that they have entered into a definitive agreement to combine their businesses and create the world’s largest global cannabis company based on pro forma revenue1. The deal is pursuant to a plan of arrangement under the Business Corporations Act (Ontario), and the implied pro forma equity value of the Combined Company is approximately C$5.0 billion (US$3.9 billion), based on the share price of Aphria and Tilray at the close of market on December 15, 2020. Following the completion of the Arrangement, the Combined Company will have principal offices in the United States (New York and Seattle), Canada (Toronto, Leamington and Vancouver Island), Portugal and Germany, and it will operate under the Tilray corporate name with shares trading on NASDAQ under ticker symbol “TLRY”.

The Combined Company, supported by low-cost, state-of-the-art cultivation, processing, and manufacturing facilities, will have a complete portfolio of branded Cannabis 2.0 products in Canada. Internationally, the Combined Company will be well-positioned to pursue growth opportunities with Aphria’s medical cannabis and distribution footprint in Germany, and Tilray’s European Union Good Manufacturing Practices low-cost cannabis production facility in Portugal, which has export capabilities and tariff-free access to the European Union to meet increasing global demand for medical cannabis. In the United States, the Combined Company will have a strong consumer packaged goods presence and infrastructure with two strategic pillars, including SweetWater Brewing Company, a cannabis lifestyle branded craft brewer, and Manitoba Harvest, a leading hemp food manufacturer and a pioneer in branded CBD and wellness products. The Combined Company is expected to have a strong, flexible balance sheet, cash balance and access to capital giving it the ability to accelerate growth and deliver attractive returns for stockholders.

Under the terms of the Arrangement, the shareholders of Aphria will receive 0.8381 shares of Tilray for each Aphria common share, while holders of Tilray shares will continue to hold their Tilray shares with no adjustment to their holdings. Upon the completion of the Arrangement, Aphria Shareholders will own approximately 62 percent of the outstanding Tilray Shares on a fully diluted basis, resulting in a reverse acquisition of Tilray, representing a premium of 23 percent based on the share price at market close on December 15, 2020 to Tilray shareholders. On a pro forma basis for the last twelve months reported by each company, the Combined Company would have had revenue of C$874 million (US$685 million).

Proven Leadership Team

The Combined Company will be led by a best-in-class management team and board of directors, with strong track records in consumer-packaged goods and cannabis experience internationally. Upon completion of the Arrangement, Aphria’s current Chairman and Chief Executive Officer, Irwin D. Simon, will lead the Combined Company as Chairman and Chief Executive Officer. The board of directors will consist of nine members, seven of which, including Mr. Simon, are current Aphria directors and two of which will be from Tilray, including Brendan Kennedy, and one of which is to be designated. Aphria and Tilray are confident that the leadership team and proposed board of directors of the Combined Company provides a strong foundation for the Combined Company to accelerate growth. Additional senior leadership positions at the Combined Company will be named at a later date.

“This is an exciting day for both companies including our 2,500 employees, for the cannabis industry, and for patients and consumers around the world. We are bringing together two world-class companies that share a culture of innovation, brand development and cultivation to enhance our Canadian, U.S., and international scale as we pursue opportunities for accelerated growth with the strength and flexibility of our balance sheet and access to capital,” said Mr. Simon. “Our highly complementary businesses create a combined company with a leading branded product portfolio, including the most comprehensive Cannabis 2.0 product offerings for patients and consumers, along with significant synergies across our operations in Canada, Europe and the United States. Our business combination with Tilray aligns with our strategic focus and emphasis on our highest return priorities as we strive to generate value for all stakeholders.”

“I am honored to work with Brendan Kennedy, a pioneer in the cannabis industry, and the Tilray team as they join forces with our talented employees at Aphria,” continued Mr. Simon. “I look forward to leading the talented teams of both Aphria and Tilray as we seek to create a leading global cannabis and consumer packaged goods company with a portfolio of medical, wellness and adult-use brands consumers love.”

Mr. Kennedy, Tilray’s Chief Executive Officer, commented, “We are thrilled to bring together two cannabis industry leaders. At this nascent stage of development and expansion of the global cannabis market, we believe companies with leading geographic scale, product range and brand expertise are most likely to benefit long-term. By leveraging our combined strengths and capabilities, we expect to be able to meet the needs of consumers more effectively all over the world and advance patient care. With a strong financial profile, low-cost production, leading brands, distribution network and unique partnerships, we believe the Combined Company will be well-positioned to deliver sustainable, attractive returns for stockholders. I look forward to working with Irwin and the Combined Company’s management team to make our consumer products more accessible around the world.”

Strategic and Financial Benefits

The Combined Company will be the largest global cannabis company based on pro forma revenue for the last twelve months reported by each company with scale and breadth across major geographies and a complete portfolio of market leading brands in the major Cannabis 2.0 product categories. Aphria and Tilray each believe the business combination pursuant to the Arrangement will provide the following financial and strategic benefits, among others:

Financial Strength and Flexibility: The Combined Company will enjoy an attractive financial profile with pro forma revenue of C$874 million (US$685 million) for the last twelve months reported by each company, the highest in the global cannabis industry. In Canada, the combination of Aphria and Tilray will create the leading adult-use cannabis company with gross revenue of C$296 million (US$232 million) in the adult-use market for the twelve months reported by each company. Aphria has generated positive adjusted EBITDA over the last six quarters2, which in combination with the synergies to be realized, provides a robust platform for future profitability and cash flow generation for the Combined Company. This, collectively with the strength of the Combined Company’s balance sheet and access to capital, is expected to help accelerate global growth and value for the Combined Company’s stakeholders.

Creates the Leading Canadian Adult-Use Cannabis Licensed Producer: Together, Aphria and Tilray will be the leading adult-use cannabis Canadian Licensed Producer based on revenue for the last twelve months by combining their respective brands, distribution networks and world-class facilities. In Canada’s C$3.1 billion adult-use, retail market3, the Combined Company will have one of the lowest cost production operations with its state-of-the-art facilities. In addition, the Combined Company will have a portfolio of carefully curated brands across all consumer segments that are sold through its distribution partners. On a pro forma basis, for the period August to October 2020, the Combined Company would have held a 17.3% retail market share4, the largest share held by any single Licensed Producer in Canada and 700 basis points higher than the next closest competitor.

Increases Product Breadth and Commitment to Innovation: Leveraging both Aphria and Tilray’s commitment and culture of innovation and brand building, the Combined Company will serve clients with a complete portfolio of Cannabis 2.0 products and sales and service infrastructure supported by leading distribution partners. Aphria and Tilray’s complementary brands will be available across economy, value, core, premium and premium plus product offerings. In addition, the Combined Company will have a complete breadth of products in every major cannabis category, including flower, pre-roll, oils, capsules, vapes, edibles and beverages.

Establishes an Unrivaled European Platform: The Combined Company will be well-positioned to pursue growth opportunities with its end-to-end EU-GMP supply chain and distribution, which includes Aphria’s German medical cannabis distribution footprint and Tilray’s 2.7 million square foot European EU-GMP low-cost cannabis cultivation and production facility in Portugal. In Germany, Aphria’s wholly-owned subsidiary, CC Pharma GmbH, will provide the Combined Company with distribution capabilities for the Aphria and Tilray medical cannabis brands to more than 13,000 pharmacies. In Portugal, Tilray’s EU-GMP cultivation and production facility will provide the Combined Company with the capacity to cultivate and produce medical cannabis products in order to meet international demand and has export capabilities, which provides tariff-free access to the EU.

Enhances Consumer Packaged Goods Presence and Infrastructure in the U.S.: In the United States, the Combined Company will have a strong consumer packaged goods presence and infrastructure with two strategic pillars, including SweetWater, a cannabis lifestyle branded craft brewer, and Manitoba Harvest, a pioneer in branded hemp, CBD and wellness products with access to 17,000 stores in North America. The Combined Company is expected to leverage SweetWater’s craft beer manufacturing and distribution network to build brand awareness for the Combined Company’s leading brands via craft beers, hard seltzers, and other beverages as it seeks to take advantage of opportunities for both the adult-use and health and wellbeing beverage trends. The Combined Company also expects to pursue the opportunity to expand with new or existing CBD or other cannabinoid brands leveraging Manitoba Harvest’s strong hemp and wellness product platform. When U.S. regulations allow, the Combined Company expects to be well-positioned to compete in the U.S. cannabis market given its existing strong brands and distribution system in addition to its track record of growth in consumer-packaged goods and cannabis.

Positions Combined Company to Continue to Grow in the Beverage Segment: The Combined Company believes it will be well-positioned to pursue an accelerated rate of growth in the Canadian and the U.S. beverage industries by leveraging SweetWater’s innovation, knowledge, and expertise to introduce adult-use cannabis brands via craft beers and other beverages. This includes leveraging Aphria and Tilray’s proven distribution networks in Canada to sell SweetWater’s 420 cannabis lifestyle brand in Canada.

Substantial Synergies: The combination of Aphria and Tilray is expected to deliver approximately C$100 million of annual pre-tax cost synergies within 24 months of the completion of the transaction. The Combined Company expects to achieve cost synergies in the key areas of cultivation and production, cannabis and product purchasing, sales and marketing and corporate expenses. This is expected to include the opportunity for Aphria’s Leamington, Ontario operations to provide additional volume for Tilray’s brands and to replace the need for Tilray to use wholesale cannabis purchases from other licensed producers. Tilray’s London, Ontario facility will also provide Aphria with excess capacity to increase production of additional form factors including their branded edibles and beverages. The Combined Company is considering utilizing Tilray’s existing Nanaimo, British Columbia facility for Aphria’s premium Broken Coast brand to increasingly meet consumer demand for its products. The Combined Company plans to capitalize on opportunities for growth through a broadened product offering and additional form factors, with the aim of increasing adult-use cannabis brand availability across certain Canadian provinces to an expanded customer base with the Combined Company’s scalable infrastructure. Internationally, the Combined Company will have the opportunity to reach additional pharmacies and patients via distribution relationships. The combination is expected to unlock significant shareholder value.

Agreement Details

Under the terms of the Agreement, the Arrangement will be carried out by way of a court approved plan of arrangement under the Business Corporations Act (Ontario) and will require the approval of at least two-thirds of the votes cast by the Aphria Shareholders at a special meeting. Approval of a majority of the votes cast by Tilray stockholders will be required to, among other things contemplated by the Agreement, authorize the issuance of Tilray shares to Aphria shareholders pursuant to the Arrangement. Following completion of the Arrangement, Aphria will become a wholly-owned subsidiary of Tilray, with Aphria shareholders owning approximately 62 percent of Tilray.

Completion of the Arrangement is subject to regulatory and court approvals and other customary closing conditions. Regulatory approvals expected to be required include Competition Bureau (Canada), U.S. HSR and Germany FDI. The Agreement includes certain reciprocal customary provisions, including covenants in respect of the non-solicitation of alternative transactions, a right to match superior proposals and C$65 million (US$50 million) reciprocal termination fee payable under certain circumstances. The Arrangement is expected to close in the second quarter of calendar year 2021 following the receipt of such regulatory approvals, as well as court approval of the Arrangement.

Each of Aphria’s and Tilray’s respective directors and officers and certain principal Tilray Stockholders have entered into voting support agreements agreeing to vote their Aphria Shares or Tilray Shares, as applicable, in favor of the resolutions put before them pursuant to the Agreement.

For further information on the terms and conditions of the Arrangement, please refer to the Agreement in its entirety, which will be available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Full details of the Arrangement will be included in a management information circular of Aphria and in a proxy statement of Tilray to be delivered to Aphria Shareholders and the Tilray Stockholders, respectively, in the coming weeks.

Board of Directors’ Approval

Each of Aphria’s and Tilray’s respective board of directors has unanimously approved the Agreement and the Arrangement. Jefferies LLC provided a fairness opinion to the Board of Directors of Aphria on December 15, 2020, stating that, as of the date of such opinion and based upon the scope of review and subject to the assumptions, limitations and qualifications stated in such opinion, the Exchange Ratio is fair, from a financial point of view, to the Aphria Shareholders. Cowen provided a fairness opinion dated December 15, 2020 to the board of directors of Tilray stating that, as of the date of such opinion and based upon and subject to the assumptions, limitations and qualifications stated in such opinion, the Exchange Ratio is fair, from a financial point of view, to Tilray.

Advisors

Jefferies LLC is serving as financial advisor and DLA Piper LLP (US), DLA Piper (Canada) LLP and Fasken Martineau Dumoulin LLP are acting as legal counsel to Aphria. Cowen is serving as financial advisor and Cooley LLP and Blake, Cassels and Graydon LLP are acting as legal counsel to Tilray.

Conference Call & Webcast Presentation

Aphria and Tilray executives will host a conference call and webcast with a supplemental presentation to discuss the strategic business combination today, December 16, 2020 at 8:30 a.m. Eastern Time.

To listen to the live call, dial (647) 427-7450 from Canada and the U.S. or (888) 231-8191 from international locations and use the passcode 4334816. A telephone replay will be available approximately two hours after the call concludes through January 13, 2021. To access the recording dial (855) 859-2056 and use the passcode 4334816.

There will also be a simultaneous, live webcast and supplemental presentation available on the Investors section of Aphria’s and Tilray’s website at aphriainc.com and Tilray.com. The webcast will be archived for 30 days.

We Have A Good Thing Growing

Aphria Announces Strategic Supply Agreement With Canndoc

Aphria now positioned within two of the largest cannabis markets outside of Canada
Agreement with Israeli leader Canndoc provides access to Israel’s largest drugstore chain
Finished product will be co-branded under Aphria and Canndoc brands

CANADA: Aphria Inc., a leading global cannabis company, today announced it has entered into a Strategic Supply Agreement with Canndoc Ltd., a subsidiary of InterCure Ltd., one of Israel’s largest and most established medical cannabis producers.

Under the terms of the Agreement, Aphria will supply Canndoc with dried bulk flower over a two-year period, with the option to extend for two additional terms of two years each, and an option for an additional year after that if the parties agree to terms.  During the first two-year term and each additional term, if applicable, the Company will provide Canndoc with 3,000 kgs. of bulk dried flower, which will be processed into finished product, co-branded under the Aphria and Canndoc brand names, and sold exclusively within the Israeli market.

“We are excited about our strategic partnership with Canndoc, a well-established Israeli leader, and the opportunity to continue to expand our medical cannabis brand internationally,” said Irwin D. Simon, Chairman and Chief Executive Officer, Aphria Inc. “Today’s announcement is about more than a supply agreement. It’s about the strength and quality of our medical brand, Aphria, being continuously validated by the world’s medical cannabis markets, including countries in which we have no distribution today. The Agreement represents a significant step for Aphria, and we look forward to bringing our high-quality medical cannabis products to patients in Israel.”

“We are proud to partner with Aphria, a global leader who shares with us the same quality values and commitments of meeting patients’ needs and improving their quality of life. This is another vote of confidence in Canndoc’s leadership and the Israeli market,” said Ehud Barak, former Israeli Prime Minister and Chairman of the Canndoc Board of Directors.

The strategic partnership will also include the possibility of Aphria and Canndoc collaborating on research initiatives such as clinical trials focused on the use of medical cannabis with leading hospitals and research institutions in Israel and exploring potential collaboration in the EU market.

Now strategically positioned in two of the largest cannabis markets outside of Canada, Germany, one of the most highly sought-after developed medical cannabis markets in the world, and Israel, one of the largest importers of medical cannabis in the world, the Company will continue to leverage its market leadership as it develops its medical cannabis markets internationally.

Canndoc has been pioneering Pharma-Grade cannabis for more than 13 years and has established itself as a well-respected company in the global cannabis industry. In March 2020, Canndoc entered a strategic partnership with Super-Pharm, Israel’s largest drugstore chain, allowing for Canndoc’s products to be distributed across 95 medical cannabis authorized pharmacies and sold to Israel’s growing medical cannabis patient community.

Aphria Announces Closing Of $100 Million Strategic Investment From Institutional Investor

CANADA: Aphria announced that it closed its previously announced strategic investment from an institutional investor for aggregate gross proceeds to the Company of C$100,000,001.

Pursuant to the Offering, the Significant Investor has agreed to purchase 14,044,944 units of the Company at a price of C$7.12 per unit. Each unit is comprised of one common share of Aphria and one-half of one common share purchase warrant of Aphria. Each warrant will entitle the Significant Investor to acquire one common share at a price of $9.26 for a period of 24 months from the closing date of the Offering.

As previously disclosed, the Company intends to use the net proceeds from the Offering to finance international expansion, working capital and general corporate purposes.

The units and the securities comprising the units are being offered pursuant to a shelf registration statement (including a prospectus) previously filed with and declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on November 26, 2019 and, in Canada, will be offered and sold in Ontario only by way of a prospectus supplement.

“We are pleased to be closing this successful $100 million strategic investment that reinforces confidence in our business and management team,” said Irwin D. Simon, Chief Executive Officer. “Importantly, now with nearly $600 million, our balance sheet has been further strengthened and will continue to support us as we execute upon our strategic plan for continued growth.”

This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which an offer, solicitation or sale would be unlawful prior to registration and qualification under the securities law of such jurisdiction.

Copies of the prospectus supplement and shelf registration statement are available relating to a particular offering will be available, under Aphria’s profile on SEDAR at www.sedar.com and EDGAR at www.sec.gov, respectively.

Aphria Agrees To Accelerate Expiry Of Green Growth Brands Bid And Terminate Its Option With GA Opportunities Corp

CANADA: Aphria announced that it has entered into a series of transactions that will accelerate the expiry date to April 25, 2019 for the previously announced take-over bid by Green Growth Brands Inc. and will terminate the arrangements with GA Opportunities Corp. for consideration of $89.0 million.
 
Irwin D. Simon, Aphria’s Chairman and Interim Chief Executive Officer stated, “We are very pleased to move forward with this favorable resolution as we continue to focus on the long-term growth of our leading cannabis business. We plan to use the $89.0 million in proceeds from the transaction to fund our strategic global expansion initiatives. On behalf of our Board of Directors and management team, we continue to recommend that Aphria shareholders reject the GGB offer and do not tender their Aphria shares to the GGB offer.”
 
Aphria has entered into a shortened deposit period agreement with GGB to facilitate the acceleration of the expiry of GGB’s offer to purchase all of the issued and outstanding shares of Aphria. In that regard, Aphria has agreed to reduce the initial deposit period of the bid to 92 days from January 23, 2019, the date that GGB commenced the GGB Offer. GGB will be mailing a Notice of Variation providing that the GGB Offer will expire at 5:00 p.m. on April 25, 2019. Based on the closing price of $3.86 per GGB share on the Canadian Securities Exchange on April 12, 2019, the implied consideration under the GGB Offer would be $6.07 per Aphria share, representing a significant 54.7% discount to Aphria’s closing price on the Toronto Stock Exchange of $13.41 per share on the same day.
 
In light of the foregoing and for the reasons previously disclosed, Aphria continues to recommend that Aphria shareholders reject the GGB Offer and do not tender their Aphria shares to the GGB Offer. 
 
In connection with the foregoing, GGB has entered into a share purchase agreement with GAOC pursuant to which GGB has agreed to purchase for cancellation 27.3 million shares held by GAOC, for an aggregate purchase price of $89.0 million. The terms of the Share Purchase Agreement include, among other things, that GGB will pay in cash $50.0 million of the Purchase Price to GAOC within 30 days of the date hereof and will issue a promissory note to GAOC for $39.0 million due in six months from the Closing Date. GGB has granted a security interest to GAOC to secure its obligations under the Share Purchase Agreement and the GGB Note. The completion of the Share Repurchase is conditional on the Purchase Price, on a per share basis, not being greater than the simple average of the closing price of the GGB shares on the CSE for the 20 trading days prior to the Closing Date.
 
Aphria and GAOC have also entered into a debt/call option settlement agreement pursuant to which Aphria has agreed to settle the debt owed under a promissory note issued by GAOC to Aphria in the amount of $55.0 million and terminate its rights under a related call option in consideration for total consideration of $89.0 million payable by GAOC upon the receipt of funds received under the Share Purchase Agreement and the GGB Note. GAOC has granted a security interest to Aphria to secure its obligations under the Settlement Agreement.

Aphria Receives Health Canada License Amendment, Approving Fully Expanded Production At Aphria One

CANADA: Aphria has announced that Health Canada has granted the Company its license amendment, permitting Aphria to commence production in an additional 800,000 square feet of facilities at its Aphria One location, as part of the Company’s completed Part IV and Part V expansions.

aphria logo“This is a major milestone for Aphria on its path to becoming a leading global cannabis producer, as well as a positive development greatly anticipated by the Canadian cannabis industry,” said Irwin D. Simon, Interim CEO of Aphria. “Aphria’s progress expanding production and automation is essential to our strategy of securing scale and long-term advantages that enable the evolution of the cannabis industry through product and brand innovation. With Aphria One, we now have the ability to expand our production capacity by over three times.”

Simon concluded, “We are ready to hit the ground running and look forward to alleviating industry-wide supply constraints with our greatly expanded production capacity and sophisticated, proprietary automation technology that will ensure Aphria remains at the forefront of cannabis cultivation and innovation. In anticipation of Health Canada’s approval, we had allocated a portion of our previously approved capacity to mother and vegetative plants that will be used as the initial growing crops in Part IV and Part V. As a result of these measures, growing operations in the expanded facilities are expected to commence without delay. By this Friday, we will move swiftly to establish nearly 22,000 plants in the Part IV and Part V expansion, with an additional 12,000 plants added each week thereafter until we reach full crop rotation.”

Industry-Leading Automation

The completed Part IV & Part V expansions at Aphria One bring industrial-scale horticulture production technology to cannabis cultivation. While critical phases such as initial cuttings, trimming and pruning mature plants will be performed by hand, the in-house designed technology will automate key steps, including:

  • Transplanting cuttings
  • Transporting plants through harvesting
  • De-budding & rough trimming
  • Drying & curing
  • Waste disposal

Aphria One

The 700,000 square foot Part IV Expansion and the 100,000 square foot Part V expansion represent the completion of Aphria’s five-part expansion at Aphria. Once in full rotation, Part IV and Part V will produce on an incremental annualized basis 80,000 kg bringing the total annualize production capacity at Aphria One to 110,000 kg.

Aphria Announces Early Termination And Liquidation of Interests In Liberty Health Sciences

Cash proceeds of $47 million received, with additional $10 million upon satisfaction of certain conditions

CANADA: Aphria announced that independent members of its Board of Directors consisting of Shlomo Bibas, John Herhalt, Tom Looney and Irwin Simon, unanimously approved the early termination and liquidation of a promissory note, option and other agreements related to the Company’s previously announced divestment of all interests in Liberty Health Sciences.
 
As detailed on September 6, 2018, the Company entered into a share purchase agreement with a group of buyers, wherein it completed the sale of the shares making up 100% of its outstanding interest in Liberty, in exchange for a five-year promissory note due September 6, 2023, bearing interest at 12% per annum and in the amount of $59,097,986. Aphria retained an irrevocable option to repurchase its shares in Liberty from the buyers for a period of up to five years, subject to the satisfaction of certain conditions.

In line with Aphria’s commitment to enhanced corporate governance practices and a renewed focus on its
strategic plan, the option in the Liberty shares represented a non-essential holding of the Company. Accordingly, the independent members of the Board of Directors unanimously approved the Early Termination and Liquidation  wherein the Company received  cash  consideration (the “Consideration”) of
$47.4 million and may earn up to an additional $10 million based on certain value thresholds, if the counterparties monetize the Liberty shares underlying the terminated option within six months. Jefferies LLC acted as financial advisor to the Company.

The Early Termination and Liquidation represents the ultimate conclusion of Aphria’s investment in Liberty. From Aphria’s first investment in Liberty of $25 million in April 2017 until today’s date, Aphria earned a return equal to 3.4 times its cumulative investment in Liberty, an internal rate of return of approximately 167.2% on the initial investment.

Aphria’s Board of Directors Rejects Green Growth Brand’s Hostile Takeover Bid As Significantly Undervalued And Inadequate

CANADA: Aphria announced that its Board of Directors has rejected the hostile bid by Green Growth Brands to acquire all of the outstanding common shares of the Company including any Common Shares that may become issued and outstanding after January 22, 2019, but prior to the expiry of the hostile bid upon the exercise, conversion or exchange of options, warrants, debentures or other securities of the Company exercisable or convertible into Common Shares, other than Common Shares owned by GGB or its affiliates, in exchange for 1.5714 shares of GGB.

aphria logoBased on the 20-day volume-weighted average price of GGB shares immediately before GGB’s announcement of an intention to acquire the Common Shares of the Company, the Hostile Bid reflects a 23% discount to the Company’s share price over the same period. The Board made its recommendation after careful consideration and receipt of the recommendation of a committee of its independent directors (the “Independent Committee”), who were advised by financial and legal advisors.

In the Board’s view, the Hostile Bid:

  • Significantly undervalues Aphria relative to its current and future worth, offering Aphria shareholders a substantial discount to its current and future value as opposed to a premium observed in other transactions in the cannabis sector involving Canadian licensed producers.
  • Would have negative repercussions, including delisting from the TSX and NYSE and a potential reduction in interest from strategic partners, that could destroy value for Aphria shareholders, with minimal offsetting operational, financial or strategic benefits.
  • Would result in Aphria shareholders effectively giving GGB shareholders a 36% interest in Aphria in exchange for shares in a company with limited operations or other experience in the cannabis industry.
  • Does not account for Aphria’s bright outlook, either as an independent company or in partnership with a strategic partner, which offers Aphria shareholders substantial value creation.

Aphria Introduces First Cannabis Strains To Be Produced In Europe With Export To Danish Partner Schroll Medical

CANADA: Aphria Inc. completed its first transfer of plant cuttings from four of the Company’s cannabis strains to Denmark-based Schroll Medical, as part of the Company’s previously announced Strategic Partnership with Schroll. The shipment was completed under permits issued by the relevant health authorities, including an export permit from Health Canada, an import permit from the Danish Medicines Agency and a phytosanitary certificate from the Canadian Food Inspection Agency.  

aphria logo“We are pleased to introduce the first four Aphria strains to be produced in Europe, through our strategic alliance with Schroll,” said Hendrik Knopp, Managing Director of Aphria Germany, who is overseeing the Partnership on behalf of Aphria and Schroll. “This marks another important milestone for Aphria as we extend our leadership position in the European market, and it gives me joy to be able to say today that we literally have a good thing growing in Europe.”  

As previously announced, Aphria will handle the worldwide distribution of medical cannabis produced by the Partnership, which is anticipated to be made available to markets across Europe as medical cannabis markets develop. Aphria plans to complete a second shipment of additional strains to Schroll in the coming months.

Aphria Completes Acquisition Of German Pharmaceutical & Medical Cannabis Distributor CC Pharma

CANADA: Aphria Inc. announced that it had completed its acquisition of CC Pharma GmbH, a leading distributor of pharmaceutical products, including medical cannabis, to more than 13,000 pharmacies in Germany, as well as throughout Europe. The Company continues to strengthen its end-to-end cannabis operations and infrastructure in Germany.

aphria logo“As one of the most promising medical cannabis markets in the world, Germany is a top strategic priority for Aphria. With today’s acquisition of CC Pharma, Aphria is creating a German and ultimately pan-European platform that brings together demand, supply and distribution.” said Vic Neufeld, CEO of Aphria. “We’re excited to welcome the CC Pharma team and the pharmacists they serve to the Aphria family.”

Dr. Manfred Ziegler, Managing Director of CC Pharma, added, “We’re thrilled to be joining forces with Aphria. Access to Aphria’s innovative products creates significant opportunities for CC Pharma’s customers to experience more medical cannabis treatment options.”

CC Pharma is a leading importer and distributor of EU-pharmaceuticals for the German market. Founded in 1999, today it has over 230 employees and offices in Germany, Denmark, Poland and the Czech Republic. CC Pharma holds 318 active German national pharmaceutical licenses and 692 active EU pharmaceutical licenses, and also operates a production, repackaging and labeling facility at its headquarters in Densborn, Germany. During 2018, CC Pharma generated revenue of approximately €262 million, with EBITDA of approximately €10.5 million.

“Through a series of deliberate and strategic partnerships, investments and appointments over the past 18 months, Aphria is a front runner in the German medical cannabis market,” said Hendrik Knopp, Managing Director of Aphria Germany. “CC Pharma’s shared values, deep relationships and local regulatory and logistical experience are a perfect complement to Aphria’s expertise. One of our first steps will be to create a new division of CC Pharma dedicated to medical cannabis.”

In addition to today’s acquisition of CC Pharma, other previously announced strategic milestones for Aphria and its wholly owned subsidiaries in Germany include:

A significant supply agreement to provide CC Pharma approximately 1,200 kilograms of medical cannabis products, exported from Canada and Denmark to Germany.

A 2018 investment in Berlin-based Schöneberg Hospital, a first step in Aphria’s plans to build and operate pain treatment centres throughout Germany.

The construction of a state-of-the-art, GMP certified cannabis vaults (5,000 kg storage capacity), in Bad Bramstedt, Germany, to be completed by late spring 2019.

The start of construction of a Research and Development indoor growing facility in Neumünster, Germany, in preparation for in-country cultivation.

Aphria paid €18.92 million in cash to the former shareholders of CC Pharma with an earn-out multiple on future EBITDA of up to another €23.5 million, if certain performance milestones are met.

Aphria’s Colombian Subsidiary, Colcanna, Inks Exclusive Agreement With Colombian Medical Federation

CANADA:  Aphria announced that its Colombian subsidiary has signed an exclusive agreement with the Federación Médica Colombiana, a national guild that oversees the ethical exercise of the medical profession in Colombia, to jointly develop an academic curriculum on the medicinal use of cannabis.

“Education in the medical community is critical for sustaining the advancement of medical cannabis in Colombia” said Gabriel Meneses, Vice President, LATAM & Caribbean at Aphria. “Colcanna is proud to make this exclusive arrangement with Federación Médica Colombiana, which will offer doctors and medical professionals across the country a credible and trusted source of information and training on medical cannabis.”

The FMC has nearly 2,000 affiliated doctors and a database of more than 70,000 medical professionals that access the organization for research and educational resources, including through a virtual platform that offers certified courses on a range of subjects. The medical cannabis curriculum developed by Colcanna and FMC will be made accessible on this platform and will be supported by scientific events for the medical community.

“As a leading global cannabis company, Aphria is committed to the long-term advancement of medical cannabis in every market in which we operate, through our diversified approach to innovation, strategic partnership and expansion,” said Jakob Ripshtein, President of Aphria. “Partnerships like this between Colcanna and FMC are a direct result of our comprehensive approach to establishing a leading foothold in Colombia, throughout Latin America and in markets around the world.”