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Wednesday, Jun 29, 2022
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.

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Tilray acquires US distillery while waiting for federal legalization

If federal legalization happens, the distillery gives Tilray more infrastructure and a larger US presence

Tilray acquires US distillery while waiting for federal legalization
Upon federal legalization, Tilray plans to launch THC products in the U.S., including a cannabis-infused whiskey. Press Photo

Canadian cannabis giant Tilray, Inc. (TSX: TLRY) (Nasdaq: TLRY) is adding another U.S.-based alcohol company to its portfolio with the acquisition of Breckenridge Distillery.

In a statement Wednesday, the firm says the Colorado whiskey distillery transaction is expected to be “immediately accretive” to earnings before interest, taxes, depreciation and amortization, while providing Tilray with more infrastructure and a larger U.S. presence if federal legalization happens.

According to a United States Securities and Exchange Commission document, Tilray agreed to pay US$102.9 million for the acquisition, which was done by issuing 11.2 million common shares.

Read more: Tilray and Aphria unveil merger plan to create world’s biggest weed firm

Read more: Analyst lukewarm on Aphria’s US$300M SweetWater acquisition

With Breckenridge Distillery’s portfolio of award-winning spirits along with a strong sales and distribution network, it’s an “iconic addition” to the firm, CEO Irwin D. Simon says.

“We see tremendous potential for Breckenridge and our existing SweetWater brand to complement each other, expanding their respective reach and driving further profitable growth in our beverage alcohol segment,” he says in a statement.

Colorado's breckenridge distillery with snow on the roof and snow covered mountains in the background

More than 85 per cent of the distillery’s revenue is generated in Colorado, and Tilray says it has potential to become a national brand. Photo via Breckenridge Distillery

Aphiria had acquired Atlanta-based craft brewery SweetWater before the Tilray and Aphiria merger.

Simon says the distillery deal is in line with the firm’s goal to launch “THC-based product adjacencies” upon federal legalization, including a cannabis-infused bourbon whisky.

“These significant, diversified revenue streams are key to delivering on our ultimate goal of industry leadership with $4 billion in revenue by the end of fiscal year 2024,” he adds.

Tilray brought in US$15 million in beverage alcohol sales from its SweetWater business in its most recent quarter.

The firm recently appointed former Bacardi general manager Blair MacNeil as president of Tilray Canada, saying his experience will help Tilray’s growth strategy.

Read more: Tilray says it’s fighting ‘ankle biters’ for sales in Q1 call

Read more: Tilray hires ex-Bacardi GM as president

On Wednesday, company stock rose nearly 4 per cent to $12.40 on the Toronto Stock Exchange.

Update (2021-12-9, 10:00 a.m.): This article has been updated to include the price of the acquisition. 

 

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