A man walks past the Canadian medical cannabis producer "Tilray" headquarters at its European production site in Cantanhede, on April 24, 2018.PATRICIA DE MELO MOREIRA/AFP/Getty Images
With federal cannabis legalization in the United States still a distant prospect, Tilray Brands Inc. is expanding its beverage business line, acquiring eight beer brands to diversify its alcohol portfolio.
Tilray TLRY-T will pay US$85-million for the companies, according to documents filed Monday with the U.S. Securities and Exchange Commission.
Tilray estimated that the acquisitions will triple its beer business, from four million cases to 12 million cases annually, and bring in US$250-million in annual pro forma revenue. The company did not share the price of the acquisitions.
In a press release Monday afternoon, Tilray said it was acquiring the eight brands, including wheat ale brewer Shock Top from Anheuser-Busch Companies, LLC BUD-N, the U.S.’s largest beer company. The expected sales volume of the acquired brands will make Tilray the fifth-largest craft-beer business in the country, the company said.
The transaction includes current employees, breweries and brewpubs associated with these brands. The purchase price will be paid in all cash and, subject to regulatory approval, the transaction is expected to close in 2023.
Already, Tilray owns four U.S. breweries, a distillery and a CBD beverage company.
Tilray chief executive officer Irwin Simon told analysts in a call Monday evening that the acquisition marks a major step forward in the company’s diversification strategy, adding scale and geographic range to the company’s brewing portfolio.
“This is an exciting milestone for our beverage portfolio, no question. But I also want to emphasize that cannabis remains central to our overall strategy,” he said.
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Tilray, like several of its peer cannabis companies, moved into alcohol markets early after cannabis legalization in Canada in the hopes of one day using those brands as a cannabis product launch pad. While 23 states and Washington have approved adult-use cannabis, it remains illegal at the federal level. Mr. Simon said that while the company was “not dependent upon [U.S.] legalization of cannabis,” he expressed optimism in Monday’s release.
“When federal cannabis legalization occurs, we’ll be able to include THC-based products and our beverage and wellness portfolios,” he told the analysts.
As part of the deal and in addition to Shock Top, Tilray will take over Breckenridge Brewery, Blue Point Brewing Company, 10 Barrel Brewing Company, Redhook Brewery, Widmer Brothers Brewing, Square Mile Cider Company and Hiball Energy.
Tilray, which also produces medicinal and adult-use marijuana, recently reported an upbeat fourth quarter, with profits up 4 per cent and cannabis sales up 21 per cent from the year before. While the company still posted a net loss of US$1.4-billion for the 2023 fiscal year, it spent only US$8.6-million in cash, compared with US$199-million the year before.
While the results beat analyst expectations, the company’s stock on the Nasdaq is still down 98.5 per cent from its high in October, 2018, and on the Toronto Stock Exchange it is down 87 per cent.
Canopy Growth Corp. and Aurora Cannabis Inc., Tilray’s competitors and former cannabis stars, are both now trading for less than a dollar.
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