Aphria

Aphria is one of the most singular stories in Canadian cannabis: a company born in the greenhouses of a small Ontario town known for its flowers and tomatoes, which in seven years has become one of the top five
before disappearing in the biggest merger in the history of the industry. Its name, derived from the Gaelic, means «free»: an ambition carried through to the end.

From Leamington greenhouses to medical cannabis

Leamington, Ontario, is nicknamed the «Greenhouse Capital of North America». It's here that Cole Cacciavillani and John Cervini have spent their careers growing Easter lilies, chrysanthemums and vegetables in greenhouses for major retail chains. In 2012, Cacciavillani, who has been interested in medical cannabis since Canada's legalization in 2001, decided to convert part of his facilities and obtained an experimental cultivation license for a few patients.

In 2013, the two partners officially founded Aphria. But they soon realized that they needed a leader capable of structuring a real pharmaceutical company. Cacciavillani contacted an old high-school classmate: Vic Neufeld, who had just left after 21 years at the helm of Jamieson Laboratories, Canada's largest manufacturer of vitamins and dietary supplements. Neufeld had taken Jamieson from $20 million to $250 million in annual sales. He agreed to become CEO of Aphria in May 2014 - the day after his retirement.

Competitive advantage: production costs

Where Aurora and Canopy Growth were building pharaonic facilities financed by the markets, Aphria was playing the operational discipline card. Its greenhouses in Leamington, supplied with natural light, enabled production at half the cost of its Canadian competitors, according to Neufeld. This cost advantage became Aphria's leitmotif and one of its main arguments with investors.

The company goes public on the TSX Venture Exchange before migrating to the main TSX and NASDAQ (symbol APHA). It develops a portfolio of recreational brands - Good Supply, Solei, RIFF, Broken Coast, B!NGO - and establishes itself as Germany's leading medical cannabis distributor through its European operations.

The crisis of 2018-2019: the short-seller attack

In December 2018, Quintessential Capital Management published a devastating report calling Aphria a «black hole for shareholders» money". It accuses management of making acquisitions in Latin America (including Colombia, Jamaica and Argentina) at inflated prices that would have enriched insiders. The share price plummets to its lowest level in over a year.

A hostile takeover bid is launched by Green Growth Brands. Under pressure, Vic Neufeld and Cole Cacciavillani resign their executive positions in January 2019, Neufeld publicly citing the health and personal cost of five years at the helm of a cannabis company. Both remain on the board.

Irwin Simon, investor and former CEO of Hain Celestial Group (NASDAQ-listed food group), is appointed Chairman of the Board and then CEO. He turned the company around, restored investor confidence and returned Aphria to operating profitability: the company posted seven consecutive quarters of positive adjusted EBITDA before the merger - an industry record.

The SweetWater acquisition and the beer pivot

In November 2020, Aphria struck a major blow by acquiring SweetWater Brewing Company, one of the largest independent craft breweries in the US, based in Atlanta, for $300 million in cash and stock. SweetWater is known for its 420 Extra Pale Ale and its «cannabis lifestyle» positioning. The deal foreshadows the brewing diversification strategy that Irwin Simon will develop next at Tilray.

The merger with Tilray: the biggest in cannabis history

On December 16, 2020, Aphria announces a merger with Tilray - in effect a reverse acquisition whereby the financially stronger Aphria absorbs Tilray while retaining the latter's name and stock ticker (TLRY on the NASDAQ). Aphria shareholders receive 62% from the new entity. Irwin Simon takes over as head of the combined group.

The merger will be finalized in May 2021. The combined market capitalization reaches $8.2 billion at the close of the first day. The combined group becomes the world's largest cannabis producer by sales, with $685 million in pro forma revenues over the previous twelve months and a presence in over 20 countries.

Aphria ceases to exist as an independent entity. Its brands, its Leamington facilities and its management continue under the name Tilray Brands.