Canada company Aphria, Inc., one of the world's leading cannabis companies, has agreed to acquire award-winning American craft beer maker, SweetWater Brewing Company LLC, in a $300 million deal.
The deal will make Aphria the first major cannabis producer to enter the alcoholic beverages market in the U.S. It will also give Aphria the strategic entry into the lucrative U.S. beverages market it has long sought.
Aphria said Wednesday the acquisition was unanimously approved by its board of directors. SweetWater will become a wholly owned Aphria subsidiary once the deal is closed before the end of December 2020.
SweetWater shareholders will get $250 million in cash and $50 million in Aphria stock. Aphria will fund the deal with debt, new stock sales and cash on hand. It expects the merger to be immediately beneficial to its earnings per share.
Market analysts said the long-expected move will allow Aphria to both access the growing $29 billion U.S. craft brew market, while accelerating Aphria's entry into the U.S. ahead of what is sees as the federal legalization of cannabis.
In a move toward this direction, five more states legalized the use of medical or recreational cannabis in the Nov. 3 general election. The states are New Jersey, Arizona, South Dakota, Mississippi and Montana.
The acquisition of SweetWater will also establish key partnerships with leading U.S. distributors, retailers and customers, and boost Aphria's ability to develop new distribution in the U.S. for its products.
"Our strong balance sheet and access to capital have enabled us to enter the U.S. through this strategic and accretive acquisition. We will establish and grow our U.S. presence through SweetWater's robust, profitable platform of craft brewing innovation, manufacturing, marketing and distribution expertise," said Irwin Simon, Aphria's chairperson and CEO.
Aphria described SweetWater as one of the largest independent craft brewers in the U.S. based on volume. It said SweetWater's flagship 420 seasonal and specialty beers are a portfolio of brands closely aligned with the cannabis lifestyle it espouses.
A key advantage offered by the 420 craft brews is they use terpenes and natural hemp flavors that emulate the flavors and aromas of popular cannabis strains when combined with select hops.
