APHA
APHA
Stocks
APHA
APHA
Stocks
When the transaction is completed, each of your Aphria common shares (“Aphria Shares”) will be replaced with 0.8381 shares of newly issued common stock of Tilray (“Tilray Shares”). 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 shares are issued). See the next question for how to value your Aphria Shares in the transaction.
We expect that going forward until the transaction closes, Aphria’s and Tilray’s share prices will trade approximately in sync, in a ratio of approximately 0.8381, such that (for example) the value of 1,000 Aphria Shares at any time will equate to the value of approximately 838 Tilray Shares.
The agreed exchange ratio of 0.8381 reflects the expected ownership of the combined company, taking into account the shares outstanding at the date of the announcement at the two companies. Tilray currently has approximately 165,387,000 shares outstanding and Aphria has approximately 321,953,000 outstanding, each on a fully diluted basis. On closing, Aphria shareholders will own approximately 62% of the outstanding shares of the enlarged Tilray, and existing Tilray shareholders will own approximately 38%. In order to achieve that result, Tilray will issue approximately 269,841,400 new shares to Aphria shareholders (269,841,400 / (165,387,000 + 269,841,400) = 62%) in exchange for their Aphria Shares. Accordingly, the exchange ratio is 0.8381 (269,841,400 / 321,953,000).
Expressed graphically:
Exchange ratio: 269,841,400 / 321,953,000 = 0.8381
The value of the Tilray Shares that you will receive on closing in exchange for your Aphria Shares will depend on the trading price of Tilray Shares on the day the transaction is completed. To help you value what you will receive under the transaction for your Aphria Shares, see the example below:
If you bought your Aphria Shares on the TSX, then:
Step 1: Calculate the number of Tilray Shares that you will receive
Calculate the number of Tilray Shares that you will receive on closing by multiplying the number of Aphria Shares that you own by 0.8381 (which is the exchange ratio).
Step 2: Calculate the value of the Tilray Shares that you will receive in US$
Multiply the answer from Step 1 by the value of each Tilray Share, which was US$9.33 based on the closing price of the Tilray Shares on the NASDAQ on December 16, 2020 (the transaction announcement date).
Step 3: Calculate the value of the Tilray Shares that you will receive in C$
Multiply the answer from Step 2 by the US$ to C$ foreign exchange rate since the Tilray Shares currently trade in US$. This will give you the value of the Tilray Shares to be received in C$.
As an example, assume that:
The value of each Tilray Share is US$9.33
1 US dollar = 1.2756 Canadian dollar
You own 1,000 Aphria Shares
1,000 Aphria Shares X 0.8381
= 838 Tilray Shares
838 Tilray Shares X US$9.33 per Tilray Share
=US$7,820
US$7,820 X 1.2756
= C$9,970 (or C$9.97 per Aphria Share that you own)
If you bought your Aphria Shares on the NASDAQ, then:
Step 1: Calculate the number of Tilray Shares that you will receive
Calculate the number of Tilray Shares that you will receive on closing by multiplying the number of Aphria Shares that you own by 0.8381 (which is the exchange ratio).
Step 2: Calculate the value of the Tilray Shares that you will receive in US$
Multiply the answer from Step 1 by the value of each Tilray Share, which was US$9.33 based on the closing price of the Tilray Shares on the NASDAQ on December 16, 2020 (the transaction announcement date).
1,000 Aphria Shares X 0.8381
= 838 Tilray Shares
838 Tilray Shares X US$9.33 per Tilray Share
=US$7,820 (or US$7.82 per Aphria Share that you own)
Current and recent share price and trading data, and US$/C$ exchange rates, can be found at your preferred market data sources, or the following:
APHA trading on TSX HERE https://money.tmx.com/en/quote/APHA
APHA trading on NASDAQ HERE https://www.nasdaq.com/market-activity/stocks/apha
TLRY trading on NASDAQ HERE https://www.nasdaq.com/market-activity/stocks/tlry
US$:C$ exchange rate HERE https://www.oanda.com/us-en/trading/instruments/usd-cad/
On completion the transaction, Aphria shareholders will own 62% of the shares of the combined company which will operate under the Tilray name. This means that Aphria shareholders will benefit from 62% of the value expected by Aphria’s management to be created by the combined company after closing. In particular, part of the value that is expected to be created for the Aphria shareholders should come from approximately C$100 million of annual pre-tax cost synergies (cost savings) that are expected to occur in the next 24 months following the completion of the transaction, as the businesses are combined.
Tilray Shares are currently listed on the NASDAQ and trade in US dollars. In addition, Tilray intends to apply to list the Tilray Shares on the TSX and trade in Canadian dollars, so that following the closing, Aphria shareholders can continue to trade their new Tilray Shares on either exchange, in either currency.
Aphria and Tilray will work with the TSX to determine if Tilray will be included in the S&P/TSX Composite Index following completion of the transaction.
Yes, you will have a chance to vote on the transaction at a meeting of shareholders. The transaction must be approved by at least two-thirds of the votes cast by Aphria shareholders. Full details of the transaction will be included in a management information circular of Aphria to be mailed to Aphria Shareholders in the coming weeks.
The transaction is expected to close in the second calendar quarter of 2021.
For Canadian shareholders that hold Aphria Shares in RESP, TFSA, RRSP or other tax-deferred accounts, and who have a realized a profit (gain) on those shares, the shares should benefit from the tax deferrals intended for those plans. That means you should not be immediately taxed on any net profit you may receive as a result of this transaction. Further, your new Tilray Shares will remain eligible for inclusion in RESP, TFSA and RRSP or other tax deferred accounts.
For Aphria shareholders that are U.S. taxpayers, we expect the transaction to be tax-deferred.
However, since your tax circumstances may be unique, you should consult your tax advisor to determine the tax consequences of the transaction on you.
Additional Information: For more information about the transaction, please refer to the announcement press release, which is available HERE.
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.