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Aphria to acquire SweetWater
Posted on Thursday, 05 November 2020 14:28
Aphria is set to be the first Canadian marijuana business to tap the US beer sector as the group has agreed to pick up SweetWater Brewing Company for around USD 300.00 million.

The target is billed as one of the largest independent craft brewers in the States based on volume, with 420 beverage offerings and a portfolio of brands closely aligned with a cannabis lifestyle.

Under the terms of the agreement, SweetWater will become wholly owned by Aphria and shareholders with receive USD 250.00 million in cash and USD 50.00 million in stock at closing.

In addition, the backers are eligible for an additional USD 66.00 million via an earnout through the year ended 2023.

The initial value represents around 12.5x SweetWater’s earnings before interest, taxes, depreciation and amortisation (EBITDA).

Closing is expected before the end of 2020.

Aphria intends to finance part of the deal via a committed USD 100.00 million term debt facility, accessing up to USD 100.00 million from its existing at-the-market equity programme and available cash on hand.

Founded in 1997, SweetWater has a strong distribution presence in 27 states, while suppling beverages in over 29,000 retail locations and in more than 10,000 bars and restaurants.

In the year ended 31st December 2019, the company generated net revenue of USD 66.60 million on adjusted EBITDA of USD 22.10 million.

During the same timeframe, the group experienced a 7.0 per cent year-on-year growth in production volume to around 261,000 barrels, twice the growth rate of the craft beer market across the whole US, according to the Brewers Association.

Together with Aphria, the combined company will have around CAD 650.00 million (USD 493.17 million) to CAD 675.00 million annualised pro-froma net revenue and CAD 65.00 million to CAD 70.00 million of annualised pro forma adjusted EBITDA.

The acquiror’s acquisition of SweetWater will provide it with a robust, profitable platform for future growth and development in the US.

Aphria plans to introduce its existing cannabis brands via craft beers and other beverages as it looks to tap the adult-use and health and wellbeing trends.

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