Why Aphria and Tilray Are Soaring Today

In pre-market trading Wednesday morning, shares of the Canadian pot titan Aphria (NASDAQ:APHA) jumped by as much as 15%, while fellow cannabis giant Tilray (NASDAQ:TLRY) saw its stock rise by a handsome 26%…

The spark? Aphria and Tilray are both up by double-digits this morning in response to an article from Bloomberg outlining the details of a possible merger between the two Canadian pot titans. This proposed tie-up would create one of the largest cannabis companies in the world in terms of annual sales.

Per the Bloomberg article, Aphria agreed to pay a 23% premium — relative to Tilray’s closing price of $7.87 on Tuesday — in an all-stock transaction. The newly combined entity would retain the Tilray name and trade under its current ticker on the Nasdaq stock exchange. Aphria’s shareholders would own approximately 62% of Tilray stock upon closing.

Additionally, the merged company would be domiciled in the U.S. in a bid to capture a significant share of this all-important cannabis market. Aphria CEO Irwin Simon would head up the combined entity, while Tilray’s boss Brendan Kennedy would downshift to a member of the board. Final approval of the merger reportedly rests with Tilray’s shareholders.

Would the revamped version of Tilray be a worthwhile investment? That all depends on your view of the future of the legal cannabis space. Cannabis is undoubtedly a booming industry. But the hard truth is that several pieces still need to fall into place for any of the publicly traded licensed producers to be a truly attractive investing vehicle.

Most importantly, the U.S. must end its…

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