Tilray Brands shares took off on the news the Canadian-based cannabis company is expanding its United States beverage portfolio with the all-cash acquisition of eight craft beer brands from Anheuser-Busch.
The purchase price of the acquisition, which is expected to close within 2023, is US$85 million, Tilray indicated in a US Securities and Exchange Commission filing.
Upon closing, Tilray is set to acquire Shock Top, Breckenridge Brewery, Blue Point Brewing Company, 10 Barrel Brewing Company, Redhook Brewery, Widmer Brothers Brewing, Square Mile Cider Company, and HiBall Energy, including the current employees, breweries, and brewpubs associated with these brands.
It will position the company as the fifth-largest craft brewer in the United States, up from 9th place, with 5% craft beer market share, according to Tilray.
“Today’s announcement both solidifies our national leadership position and share in the U.S. craft brewing market and marks a major step forward in our diversification strategy,” the company’s CEO Irwin Simon said in a statement.
While noting that “details remain thin” regarding the deal, analysts at Canaccord Genuity (TSX:CF, LSE:CF) wrote that it is expected to bring accretive impacts to Tilray’s earnings before interest, taxes, depreciation, and amortization (EBITDA).
“As a result of the acquisition, Tilray anticipates its beverage/alcohol portfolio to generate total annualized revenues of US$300 million, with about US$250 million attributed to craft brewing revenues,” they wrote in a note to clients.
“Based on fiscal 4Q/23 run-rates, this would imply that the eight newly acquired brands are expected to generate additional revenues of about US$170 million under the segment.”
The analysts also noted Tilray’s plans to expand its distribution points through its existing relationship with Anheuser-Busch, increase its production footprint to a total of six facilities in the U.S. from two facilities, and up its brew pub count to 12 across the country.
They awarded the stock a ‘Buy’ rating with a US$4.25 price target following the announcement.
Tilray shares traded up 30.6% at US$2.90 at noon on Tuesday.
Contact the author at emily.jarvie@proactiveinvestors.com
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