In the press release, it says that Aphria shareholders will own approximately 62% of the outstanding shares of Tilray on a fully diluted basis, resulting in a reverse acquisition of Tilray.
Under the structure of the transaction, at closing, Tilray, Inc. (“Tilray”) will issue new shares of Tilray in exchange for all of the outstanding shares of Aphria Inc. (“Aphria”) and the Tilray and Aphria businesses will be combined. It is a “reverse acquisition” because Aphria’s shareholders will hold approximately 62% of the total equity in Tilray (on a fully diluted basis) with the existing Tilray shareholders holding approximately 38%.
In addition, Irwin D. Simon, the current Chairman & CEO of Aphria, will become the Chairman & CEO of Tilray. Tilray’s board of directors will be increased to nine directors, seven of which will include Mr. Simon and the other six current directors of Aphria, representing a majority of the Board.
Tilray will make an amendment to its certificate of incorporation to implement the arrangement, all as described in the circular and if approved at the Tilray meeting. The arrangement will be carried out in accordance with the Arrangement Agreement dated December 15, 2020, as amended on February 19, 2021, between Aphria and Tilray, and the documents referred to in the Arrangement Agreement. Upon the completion of the arrangement, it is expected that the exchange ratio will result in Aphria shareholders will own approximately 62% of the outstanding Tilray shares on a fully diluted basis, and Tilray shareholders will own approximately 38% of the outstanding Tilray shares on a fully diluted basis, resulting in the reverse acquisition of Tilray.
Under the arrangement and subject to the terms of the plan of arrangement, each Aphria shareholder will receive, for each Aphria Share held, 0.8381 of a Tilray Share. You will no longer own any Aphria shares, but instead will own Tilray shares. As an example, if you owned 1,000 Aphria shares on the closing day of the transaction, after the closing, you will own 838 Tilray Shares (since no fractional Tilray Shares are issued).
|New Tilray||Fully diluted shares||Percent|
|Fully diluted shares outstanding||435,228,400||100%|
(1) This graph assumes no change in the number of current issued and outstanding shares.
The completion of the arrangement requires the approval from the Aphria Shareholders and the Tilray Stockholders, receipt of the Final Order from the Court, and receipt of the Required Regulatory Approvals.
If the arrangement is completed, Tilray will acquire all outstanding Aphria Shares and Aphria will become a wholly-owned subsidiary of Tilray. Tilray intends to have the Aphria Shares delisted from the TSX.
Tilray Shares are currently listed on the Nasdaq under the symbol “TLRY” and trade in U.S. dollars. In addition, Tilray currently expects to list the Tilray Shares on the TSX at, or as soon as practicable following, the Effective Time, which will trade in Canadian dollars. Consequently, following the closing, Aphria Shareholders are expected to be able to trade their Tilray Shares on either exchange, in either currency.
You are being asked to consider and, if thought advisable, approve the arrangement involving, among other things, the acquisition by Tilray of all of the outstanding Aphria Shares pursuant to the arrangement Agreement.
Yes. The Aphria Board has unanimously determined that the arrangement is in the best interests of Aphria and recommends that Aphria Shareholders vote FOR the Aphria Resolution.
In making its recommendation, the Aphria Board considered a number of factors as described in the preliminary Circular, including the opinion from Jefferies to the effect that, as of the date of such opinion, based upon and subject to the limitations and assumptions set out therein and such other matters as Jefferies considered relevant, the Exchange Ratio is fair, from a financial point of view, to Aphria Shareholders.
To be effective, the Aphria Resolution must be approved, with or without variation, by the affirmative vote of at least two-thirds of the votes cast on the Aphria Resolution by Aphria Shareholders, virtually present or represented by proxy at the Aphria Meeting.
Yes. Registered holders of Aphria Shares are entitled to Dissent Rights only if they follow the procedures specified in the Business Corporations Act (Ontario), as modified by the Interim Order and the Plan of arrangement. Persons who are beneficial owners of Aphria Shares registered in the name of an Intermediary who wish to dissent should be aware that only registered Aphria Shareholders are entitled to Dissent Rights. If you wish to exercise Dissent Rights, you should review the requirements summarized in the preliminary Circular carefully and consult with your legal advisor.
For Canadian resident shareholders that hold Aphria Shares in an RESP, TFSA, RRSP or other registered account, no immediate Canadian tax will arise as a result of the arrangement, whether or not any gain is realized on the disposition of Aphria Shares. Further, Tilray Shares will remain qualified investments for an RESP, TFSA and RRSP or other registered accounts.
For a summary of certain of the principal Canadian federal income tax consequences of the arrangement applicable to Aphria Shareholders, please refer to the section titled “Certain Canadian Federal Income Tax Considerations” in the Preliminary Circular. Such summary is not intended to be legal, business or tax advice. Aphria Shareholders should consult their own tax advisors as to the tax consequences of the arrangement to them with respect to their particular circumstances.
You will receive the Consideration due to you under the arrangement as soon as practicable after the arrangement becomes effective and your Letter of Transmittal and Aphria Share certificate(s) or DRS Advice(s) and all other required documents are properly completed and received by the Depositary. It is anticipated that the arrangement will be completed in Q2, 2021, assuming the Aphria Resolution is approved, all Court and all other approvals have been obtained, and all other conditions of closing have been satisfied or waived.
If the Aphria Resolution is not approved or if the arrangement is not otherwise completed, your Aphria share certificate(s) or DRS Advice(s) will be returned promptly to you by the Depositary.
If you have any questions about the Preliminary Circular or the matters described in the Preliminary Circular, please contact your professional advisor. Aphria Shareholders who would like additional copies, without charge, of the Preliminary Circular or have additional questions about the procedures for voting Aphria Shares or making an election, should contact their Intermediary or Laurel Hill by email, or at one of the numbers below.
North American Toll-Free Number: 1-877-452-7184
Outside of North America Collect Calls Number: 416-304-0211
By Email: email@example.com
Cautionary Note Regarding Forward-Looking Statements: Certain information in this document constitutes forward-looking information or forward-looking statements (together, “forward-looking statements”) under applicable Canadian and United States securities laws. Forward-looking statements use words such as “forecast”, “future”, “should”, “could”, “enable”, “potential”, “contemplate”, “believe”, “anticipate”, “estimate”, “plan”, “expect”, “intend”, “may”, “project”, “will”, “would” and the negative of these terms or similar expressions to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Various assumptions were used in drawing the conclusions contained in the forward-looking statements which the management of Aphria believes are reasonable. Forward-looking statements involve significant known and unknown risks and uncertainties. Many factors could cause actual results, performance or achievement to be materially different from any future forward-looking statements. For full discussion of such applicable forward-looking statements, the applicable assumptions and the related risks and uncertainties, please refer to “The Cautionary Note Regarding Forward-Looking Statements” in the announcement press release noted above, which cautionary note is incorporated by reference herein.