- Since the merger was announced last December, Tilray shares have detached from the merger price and are trading at a ~30% premium.
- Merger arbitrage is best played through a paired trade (long Aphria and short Tilray); market prices indicate borrowing costs of shorting Tilray is much higher than the ~30% merger discount.
- We remain bullish on Aphria/Tilray due to their leadership in the global cannabis industry but one should avoid buying Aphria shares simply to take advantage of the merger arbitrage.
For further details see:
Tilray/Aphria: The 30% Merger Arbitrage Is Tough To Play