Shares in Canadian cannabis companies Aphria Inc. and Tilray Inc. skyrocketed in late trading Tuesday after a report that the companies are in advanced talks to merge.
could announce a merger as early as this week, and are discussing moving the combined company to the U.S., basing the news on unnamed sources. The same news source reported over the summer that Aphria was in talks to merge with Aurora Cannabis Inc.
but that deal never came to fruition.
BNN reported that Aphria would be the dominant entity in the merger in current talks, retaining 60% ownership of the combined entity. Aphria Chief Executive Irwin Simon would run the merged company while Tilray CEO Brendan Kennedy would likely land on the board of directors instead of retaining an executive role, according to the report, which noted that the deal could still fall apart.
Canadian cannabis stocks spiked after the country became the first industrialized nation to legalize recreational sales of pot, but fell back sharply after the companies did not live up to outsize growth expectations. Shares have battled back in the past month as hopes for legalization in the U.S. increased after the November election.
Aphria was one of the first cannabis companies to face a reckoning, shaking up its executive team in early 2019 after short-sellers publicly questioned some of the deals that top executives had made. Tilray was the first major pot company to go public on a U.S. exchange and shares spiked to more than $100 not long after it went public in July 2018 before falling back considerably.
Both stocks increased more than 15% in after-hours trading Tuesday following the release of the report. Tilray closed with a 6.8% gain at $7.87, while Aphria added 3.1% to $8.12 in the regular session.