On December 8th, Tilray (TSX: TLRY) announced the acquisition of Breckenridge Distillery, a whiskey and craft spirits seller. The company will be paying $102.9 million through the issuance of 11,245,511 Tilray shares. The company says that this acquisition will be immediately accretive to their adjusted EBITDA, but provide no additional financial colour other than the company’s adjusted EBITDA margin is “approximately 25 percent.”
Tilray positions this acquisition as a way to “commercialize new and innovative products” of infused cannabis drinks when federally permissible.
Tilray currently has 20 analysts covering the stock with an average 12-month price target of US$12.74, or a 43% upside to the current stock price. Out of the 20 analysts, 1 has a strong buy rating, 2 have buy ratings, 14 have hold ratings, and the last 3 analysts have to sell ratings on Tilray. The street high comes in at US$23 from Cowen and Company while the lowest sits at US$0.82 from GLJ Research.
In Canaccord’s review of the purchase, they reiterate their US$12 12-month price target and hold rating, saying that at face value the acquisition “could represent an attractive addition to the company’s overall US CPG footprint.” Although they warn the ability to actually leverage an alcoholic beverage company into any sort of THC-exposure asset.
Canaccord says that since Breckenridge Distillery derives roughly 85% of its revenue from Colorado, it will help strengthen its US footprint and will be able to use SweetWater to increase its exposure and product development throughout the United States.
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