LEAMINGTON, ON, Nov. 30, 2020 /PRNewswire/ - Aphria Inc.
("Aphria", "we" or the "Company") (TSX: APHA)
(NASDAQ: APHA), a leading global cannabis company inspiring and
empowering the worldwide community to live their very best life,
announced it has closed the accretive, strategic acquisition (the
"Acquisition") of SW Brewing Company, LLC
("SweetWater Brewing Company" or "SweetWater"), one
of the largest independent craft brewers in the United States ("U.S.") based on volume.
Beginning with the flagship 420 beverage offerings, SweetWater has
created an award-winning lineup of year-round, seasonal and
specialty beers, a portfolio of brands closely aligned with a
cannabis lifestyle.
"We are excited to take this significant step forward to build
upon our existing foundation in cannabis with the acquisition of
SweetWater and their complementary cannabis lifestyle brands.
Together, our company will further diversify our product offering,
broaden our consumer reach and enhance loyalty with consumers,"
commented Irwin D. Simon, Aphria
Inc.'s Chairman and Chief Executive Officer. "We are very pleased
to welcome Freddy Bensch to our
management team and the entire SweetWater organization to the
Aphria family. We look forward to expanding our addressable market
and leveraging SweetWater's existing infrastructure to accelerate
Aphria's entry into the U.S. ahead of federal legalization of
cannabis to fuel sustainable profitable growth."
As part of the Acquisition, unitholders of SweetWater received
USD $250 million in cash and USD
$50 million in Aphria stock at
closing. Aphria financed the cash component of the purchase price
under the Agreement through available cash on hand, including the
recently raised funds under its At-the-Market equity program.
Jefferies LLC served as financial advisor and DLA Piper LLP
(U.S.) and Fasken Martineau Dumoulin LLP (Canada) acted as legal counsel to Aphria.
Arlington Capital Advisors served as financial advisor and Winston
& Strawn LLP acted as legal counsel to SweetWater.
We Have A Good Thing Growing
About Aphria Inc.
Aphria Inc. is a leading global
cannabis company inspiring and empowering the worldwide community
to live their very best life. Headquartered in Leamington, Ontario – the greenhouse capital
of Canada – Aphria Inc. has been
setting the standard for the low-cost production of high-quality
cannabis at scale, grown in the most natural conditions possible.
Focusing on untapped opportunities and backed by the latest
technologies, Aphria Inc. is committed to bringing breakthrough
innovation to the global cannabis market. The Company's portfolio
of brands is grounded in expertly researched consumer insights
designed to meet the needs of every consumer segment. Rooted in our
founders' multi-generational expertise in commercial agriculture,
Aphria Inc. drives sustainable long-term shareholder value through
a diversified approach to innovation, strategic partnerships, and
global expansion.
For more information, visit: aphriainc.com
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS OF
APHRIA:
Certain information in this news release
constitutes forward-looking information or forward-looking
statements (together, "forward-looking statements") under
applicable securities laws and are expressly qualified by this
cautionary statement. Any information or statements that are
contained in this news release that are not statements of
historical fact may be deemed to be forward-looking statements,
including, but not limited to, statements in this news release with
regards to available cash resources, potential acquisition
opportunities, Canadian and international growth, Aphria's market
position, ability to generate consistent growth, and net revenue
and adjusted EBITDA. The Company uses words such as "forecast",
"future", "should", "could", "enable", "potential", "contemplate",
"believe", "anticipate", "estimate", "plan", "expect", "intend",
"may", "project", "will", "would" and the negative of these terms
or similar expressions to identify forward-looking statements,
although not all forward-looking statements contain these
identifying words. Various assumptions were used in drawing the
conclusions contained in the forward-looking statements throughout
this news release. Forward-looking statements reflect management's
current beliefs with respect to future events and are based on
information currently available to management including based on
reasonable assumptions, estimates, internal and external analysis
and opinions of management considering its experience, perception
of trends, current conditions and expected developments as well as
other factors that management believes to be relevant as at the
date such statements are made. Forward-looking statements involve
significant known and unknown risks and uncertainties. Many factors
could cause actual results, performance or achievement to be
materially different from any future forward-looking statements.
Factors that may cause such differences include, but are not
limited to, risks assumptions and expectations described in the
Company's critical accounting policies and estimates; the adoption
and impact of certain accounting pronouncements; the Company's
future financial and operating performance; the competitive and
business strategies of the Company; the intention to grow the
business, operations and potential activities of the Company; the
ability of the Company to successfully integrate the SweetWater
business; the Company's ability to provide a return on
investment from its acquisition of SweetWater; the Company's
ability to maintain a strong financial position and manage costs;
the Company's ability to maximize the utilization of its
existing assets and investments; the Company's ability to
take a leadership position in the industry; the expected inventory
and production capacity of the Company; the expected category
growth of the Company's products; the anticipated increase in
demand for bulk and saleable flower, and the related growth in the
wholesale market; the expected variability of wholesale cannabis
revenue; the market for the Company's current and proposed
products, including vape pens, as well as the Company's ability to
capture market share; the anticipated timing for the release of
expected product offerings; the development of affiliated brands,
product diversification and future corporate development;
expectations with respect to the Company's product development,
product offering and the sales mix thereof; the Company's
satisfaction of international demand for its products; the
Company's plans with respect to importation/exportation; the
Company's ability to meet the demand for medical cannabis; the
Company's plans to establish strategic partnerships, including
collaborations with academic institutions in Germany; whether the Company will have
sufficient working capital and its ability to obtain financing
required in order to develop its business and continue operations;
the Company's expected ongoing contractual relationships, and the
terms thereof; the Company's ability to comply with its financial
covenants in the future; the applicable laws, regulations,
licensing and any amendments thereof related to the cultivation,
production and sale of cannabis product in the Canadian and
international markets; the grant, renewal and impact of any license
or supplemental license to conduct activities with cannabis or any
amendments thereof; the Company's purpose, mission, vision
and values with; the effects of COVID-19 nationally and globally
which could have a material adverse impact on Aphria's business,
operations and financial results, including disruptions in
cultivation and processing, supply chains and sales channels, as
well as a deterioration of general economic conditions including
national and/or global recessions and the response of governments
to the COVID-19 pandemic in respect of the operation of retail
stores; general economic conditions; adverse industry events and
future steps to be taken in response to COVID-19; the expected cost
to produce a gram of dried cannabis; the expected cost to
process cannabis oil; expectations with respect to crop
rotation and harvest, the anticipated future gross margins of the
Company and the potential for significant growths or losses; the
potential for the Company to record future impairment losses; the
performance of the Company's business and operations; the Company's
ability to capitalize on the US market; future expenditures,
strategic investments and capital activities; the anticipated
timing for the completion of the Company's German cultivation
facility, the first harvest from such facility and the expected
capacity of such facility; and current and future legal actions,
and the Company's ability to cover any costs or judgements arising
from these actions either through insurance or otherwise.
Readers are cautioned that the foregoing list is not exhaustive
and should consider the other factors discussed under the heading
"Risk Factors" in Aphria's most recent Annual Information Form and
under the heading "Industry Trends and Risks" in Aphria's
Management's Discussion and Analysis for the three months ended
August 31, 2020, each available on
SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Readers are
further cautioned not to place undue reliance on forward-looking
statements as there can be no assurance that the plans, intentions
or expectations upon which they are placed will occur. Such
information, although considered reasonable by management at the
time of preparation, may prove to be incorrect and actual results
may differ materially from those anticipated. The
forward-looking statements included in this news release are made
as of the date of this news release and the Company does not
undertake an obligation to publicly update such forward-looking
statements to reflect new information, subsequent events or
otherwise unless required by applicable securities laws. Neither
TSX nor its Regulation Services Provider (as that term is defined
in the policies of Toronto Stock Exchange) accepts responsibility
for the adequacy or accuracy of this release.
CAUTIONARY NOTE REGARDING THE BUSINESS OF SWEETWATER AND THE
ACQUISITION:
There are many risks associated with the
Acquisition. Investors in Aphria should carefully consider
the following risks which apply to the Acquisition and the combined
company following the closing of the Acquisition: (i) There
is a risk that some or all the expected benefits of the acquisition
may fail to materialize or may not occur within the time periods
anticipated by Aphria. The challenge of coordinating previously
independent businesses makes evaluating the business and future
financial prospects of the combined company following the
acquisition difficult. (ii) The success of SweetWater has been the
experienced management team and dedicated employees. There
can be no assurance that the management team of SweetWater will
continue for any extended time period with Aphria. The
failure to retain key executives and employees of SweetWater could
have a material adverse effect on the success of the acquisition.
(iii) The unaudited pro forma and historical financial information
included in our press release, dated November 4, 2020, has been prepared using the
financial statements of Aphria and SweetWater, is presented for
illustrative purposes only and should not be considered to be an
indication of the results of operations or financial condition of
the combined company following the acquisition. (iv) The beer
market is mature and competitive. SweetWater competes with a
variety of domestic and international brewers, many of whom have
substantially greater financial, production and marketing
resources. There is no assurance that SweetWater's historical
financial results will continue in the future. (v) SweetWater's
ability to manufacture and supply products and its sales revenue,
results of operations, cashflow and liquidity may be adversely
impacted by the ongoing COVID-19 (coronavirus) outbreak. As
the outbreak and global responses to it continue, the operations of
SweetWater, its customers and suppliers may be materially adversely
affected by additional supply delays, shortages of labor and/or
partial or complete closure of its facility or its customers. (vi)
SweetWater's business is highly regulated regarding such matters as
licensing requirements, trade and pricing practices, permitted and
required labeling, advertising, promotion and marketing practices,
relationships with distributors, environmental and related matters.
Failure on the part of the Aphria to comply with these regulations
could have a material adverse effect on SweetWater's ability to
continue its operations in the same or similar manner previously
operated. (vii) SweetWater's operations are subject to certain
hazards and liability risks faced by all brewers, such as potential
contamination of ingredients or products and equipment defects. The
occurrence of such a problem could result in a costly product
recall and serious damage to SweetWater's reputation for product
quality.
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SOURCE Aphria Inc.