The company will release details of the vote on Monday morning, but a source with knowledge of the meeting confirmed to The Globe and Mail that the merger was approved by shareholders.
Shares of both Tilray and Aphria, which have been trading in tandem since the deal was first announced last December, dipped slightly immediately following news of the approved deal.
Aphria’s stock, which also trades on the Nasdaq, will be delisted from that exchange on May 3.
The transaction is effectively a takeover of Tilray by Aphria, with Aphria shareholders receiving 0.8381 of a share of Tilray common stock, for each Aphria share held.
Company filings show that when the two CEOs first discussed the deal in February, 2020, it was structured more as a merger of equals, with shareholders of Tilray and Aphria owning 56 per cent and 44 per cent of the combined company.
Friday’s approval of the merger by Tilray shareholders comes after weeks of uncertainty about whether the transaction would even go through.
Indeed, company filings indicate that this issue was first flagged by Tilray’s proxy solicitation partner MacKenzie Partners Inc.
From Tilray’s perspective, the idea behind combining both brands was to leverage Aphria’s scale of production given the fact that Tilray continues to rely on the wholesale cannabis market to fulfill demand.
“It’s a classic industrial strategy for the #2 and #3 players to merge and contest the #1 player for market leadership.
Both companies have incurred massive losses over the years, in part from overpaying for high-end cultivation facilities that ended up being under-utilized in the face of a domestic supply glut and lower-than-expected consumer demand.
In the U.S, Aphria owns the craft beer company Sweetwater Brewing and plans to launch a CBD-infused beverage line to the American market as the country inches towards federal legalization under Democratic president Joe Biden.