Tilray (NASDAQ:TLRY) has today announced a $110 million CAD acquisition of Alberta pot retailer FOUR20, but Tilray stock is muted on the announcement.
Tilray Stock Down During Thursday’s Trading
FOUR20, a Calgary-based cannabis retailer, currently operates 16 brick-and-mortar dispensaries in Alberta and has secured 16 additional high-traffic locations throughout the province. Under the terms of the deal, Tilray will pay an initial $70 million CAD for all the issued and outstanding securities of FOUR20, and subsequently a potential $40 million based on “certain performance milestones” by Four20. Tilray stock is currently down 1.2% during Thursday’s trading.
“With FOUR20, we will elevate the retail experience for consumers by offering the best quality-tested products while preparing for the next wave of legalized product launches taking place by year’s end,” said Tilray Chief Corporate Development Officer Andrew Pucher in this morning’s statement. Despite the dip in share value today, investors in Tilray stock will be hoping that this acquisition positions the company to take maximum advantage of legalization 2.0 in October.
Good News Ahead for Tilray Stock?
According to Tilray CEO Brendan Kennedy in a conference call earlier in August, there are still “severe distribution constraints” in terms of the cannabis industry’s retail visibility. While stores in Alberta have been opening at a relatively quick rate, other provinces such as Quebec and Ontario, Canada’s largest province by population, have been slower to fill the retail space. Kennedy said that “it’s restricting the growth of retail revenue,” which may be a contributing factor to the slump in Tilray stock, which has shed nearly 90% in the last 12 months.
Just this week it was revealed that Alberta had laid claim to the title of Canada’s largest cannabis market, with sales of $123.6 million CAD since legalization last October. Therefore, this morning’s announcement should spell good news for Tilray stock going forward, as it increases the company’s physical presence in the nation’s largest market. Ontario and Quebec followed closely behind at $121.6 million CAD and $119.2 million CAD respectively. With further plans to expand into those provinces also, perhaps Tilray stock is a promising option at $26.87.
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