Bud means a lot more to Tilray Brands Inc (NYSE:TLRY) shareholders than just a slang word for cannabis after the company acquired eight beer and beverage brands from Anheuser-Busch Inbev (NYSE: BUD) this week.
What Happened: Tilray entered into a definitive agreement with beer giant Anheuser-Busch to take over several beer and beverage brands including Shock Top, Breckenridge Brewery, Blue Point Brewing Company, 10 Barrel Brewing Company, Redhook Brewery, Widmer Brothers Brewing, Square Mile Cider Company and HiBall Energy.
The transaction will include current employees, breweries and brewpubs associated with the eight brands. The all-cash deal is expected to close this year, generating craft beer pro forma revenue of $250 million and strengthening the company's distribution capabilities.
Why It Matters: Tilray CEO Irwin Simon explained that the company isn't willing to just sit around and wait for cannabis legalization. Tilray has been focused on delivering more predictability to shareholders since it rebranded to "Tilray Brands" at the beginning of 2022, Simon said Tuesday on CNBC's "Squawk On The Street."
"I called Anheuser-Busch and asked them about these brands and we had discussions and it's a great deal for both of us," he said.
The Tilray chief told CNBC the company has been focused on diversification, adding the deal with Anheuser-Busch helps to further spread out its exposure. Thirty percent of the company is now focused on the cannabis business in Canada, 30% is weighted toward spirits and beer and another 30% is in its medical and distribution business, he said.
The deal puts Tilray in a great spot, Simon noted. Very few companies out there have cannabis, beer, bourbon and a medical distribution business, he added.
"We've gone from the ninth-largest craft brewer to the fifth-largest craft brewer so hey, in the craft brewing industry, watch out because Tilray is coming," Simon said.
Tilray is ultimately structuring its business so it doesn't have to depend on cannabis legalization in the U.S. It also makes a lot of sense given the company's prior beverage exposure and the adjacency of beer and bud.
"There's no reason one day that every one of these beers can't be infused with THC," Simon said.
The Tilray CEO noted that 35 states have legalized some form of cannabis use. He made a prediction that the government will legalize medical cannabis on a federal level in the next two years and let the states make their own calls on recreational use.
TLRY Price Action: Tilray shares are down nearly 25% over a one-year period. The stock was up 33.8% at $2.95 at the time of publication Tuesday, according to Benzinga Pro.
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