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Business Acquisitions | 12 Months Ended
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May 31, 2022
Business Combinations [Abstract] |
Business Acquisitions |
9. | Business Acquisitions
Reverse Acquisition On April 30, 2021 (“Closing Date”), Tilray acquired all of the issued and outstanding common shares of Aphria Inc. (“Aphria”), an international organization focused on building a global cannabis-lifestyle and consumer packaged goods company in addition to its businesses in the marketing and manufacturing beverage alcohol products in the United States, and in the distribution of (non-Cannabis) pharmaceutical products in Germany and Argentina, pursuant to a plan of arrangement (the “Arrangement”) under the Business Corporations Act (Ontario). The fair value of the purchase price on the closing date was, as follows:
|  | April 30, 2021 |
Number of Tilray common shares outstanding at acquisition date |  |  | 179,635,973 |
Conversion ratio |  |  | 0.8381 |
Tilray common shares issued at closing |  |  | 214,337,159 |
Market share price of Aphria converted stock units |  | $ | 14.62 |
Fair value of Tilray common stock transferred to Aphria shareholders |  |  | 3,133,609 |
Consideration related to stock-based compensation (1) |  |  | 71,297 |
Total fair value of consideration transferred |  | $ | 3,204,906 |
(1) | On acquisition date there was consideration in the form of 1,207,010 restricted stock units and 4,782,132 stock options that had been issued before the acquisition date to employees and non-employees of Tilray. The pre-combination fair value of these awards was $17,647 and $53,650, respectively.
The table below summarizes fair value of the assets acquired and the liabilities assumed as of May 31, 2022. During the year ended May 31, 2022, the Company recorded measurement period adjustments to its initial allocation of purchase price as a result of ongoing valuation procedures on assets and liabilities assumed, including: (i) a decrease in inventory of $10,000; (ii) a decrease in prepaids and other current assets of $6,000; (iii) a decrease in deferred tax liabilities, net of $11,476; (iv) an increase in accrued expenses and other current liabilities of $8,000; and (v) an increase to goodwill of $12,524 due to the incremental period adjustments discussed in items (i) through (iv). The impact of measurement period adjustments to the results of operations was immaterial.
|  |  | May 31, 2022 |
Assets |  |  |  |  |
Cash and cash equivalents |  |  | $ | 375,673 |
Accounts receivable |  |  |  | 28,054 |
Inventory |  |  |  | 66,547 |
Prepaids and other current assets |  |  |  | 2,960 |
Capital assets |  |  |  | 136,637 |
Right-of-use assets, operating leases |  |  |  | 12,606 |
Definite-lived intangible assets (estimated useful life) |  |  |  |  |
Distribution channel (15 years) |  |  |  | 404,000 |
Customer relationships (15 years) |  |  |  | 59,000 |
Know how (5 years) |  |  |  | 115,000 |
Brands (10 to 25 years) |  |  |  | 301,000 |
Indefinite-lived intangible assets |  |  |  |  |
Licenses |  |  |  | 200,000 |
Goodwill |  |  |  | 2,234,137 |
Other assets |  |  |  | 22,879 |
Total assets |  |  |  | 3,958,493 |
Liabilities |  |  |  |  |
Accounts payable |  |  |  | 62,292 |
Accrued expenses and other current liabilities |  |  |  | 93,120 |
Accrued lease obligations |  |  |  | 21,962 |
Warrant liability |  |  |  | 79,402 |
Deferred tax liabilities, net |  |  |  | 224,915 |
Convertible notes |  |  |  | 267,862 |
Other liabilities |  |  |  | 4,034 |
Total liabilities |  |  |  | 753,587 |
Net assets acquired |  |  | $ | 3,204,906 |
Revenue (unaudited) for the Company would have been higher by approximately $180,000 for the year ended May 31, 2021, if the acquisition had taken place on June 1, 2020. Net income and comprehensive net income (unaudited) would have been lower by approximately $460,000 for the year ended May 31, 2021, if the acquisition had taken place on June 1, 2020. Acquisition of Double Diamond Distillery LLC (d/b/a Breckenridge Distillery) On December 7, 2021, the Company through its wholly-owned subsidiary Four Twenty Corporation, completed the purchase of all the membership interests of Double Diamond Distillery LLC (d/b/a Breckenridge Distillery), a Colorado limited liability company and distilled spirits brand located in Breckenridge, Colorado (the “Breckenridge Acquisition”). As consideration for the Breckenridge Acquisition, the Company paid a purchase price in an aggregate amount equal to $114,068, which purchase price was satisfied through the issuance of 12,540,479 shares of Tilray’s Class 2 common shares. The Company is in the process of finalizing the fair value of the net assets acquired and, as a result, the fair value of the net assets acquired may be subject to adjustments pending completion of final valuations and post-closing adjustments. The table below summarizes preliminary estimated fair value of the assets acquired and the liabilities assumed at the effective acquisition date.
|  | Amount |
Consideration |  |  |  |
Shares |  | $ | 114,068 |
Net assets acquired |  |  |  |
Current assets |  |  |  |
Cash and cash equivalents |  |  | 326 |
Accounts receivable |  |  | 2,128 |
Prepaids and other current assets |  |  | 367 |
Inventory |  |  | 20,351 |
Long-term assets |  |  |  |
Capital assets |  |  | 11,179 |
Customer relationships (15 years) |  |  | 9,800 |
Intellectual property, trademarks & brands (15 years) |  |  | 69,950 |
Goodwill |  |  | 2,797 |
Total Assets |  |  | 116,898 |
Current liabilities |  |  |  |
Accounts payable and accrued liabilities |  |  | 2,228 |
Long-term liabilities |  |  |  |
Deferred tax liability |  |  | 602 |
Total liabilities |  |  | 2,830 |
Total net assets acquired |  | $ | 114,068 |
The goodwill of $2,797 is primarily related to factors such as synergies and market opportunities and is reported under the Company’s Beverage alcohol segment. Revenue (unaudited) for the Company would have been higher by approximately $12,000 for the year ended May 31, 2022, if the acquisition had taken place on June 1, 2021. Net income and comprehensive net income (unaudited) would have been lower by approximately $3,000 the year ended May 31, 2022, if the acquisition had taken place on June 1, 2021, primarily as a result of amortization of the intangible assets acquired. Acquisition of SW Brewing Company, LLC In connection with the acquisition on November 25, 2020, the Company originally recorded contingent consideration of $60,657, expected to be paid in December 2023. During the year, the Company reduced the estimate of the contingent consideration by $44,650. The fair value has been determined by discounting future expected cash outflows at a discount rate of 5%. The inputs into the future expected cash outflows are level 3 on the fair value hierarchy and are subject to volatility and uncertainty, which could significantly affect the fair value of the contingent consideration in future periods. As at May 31, 2022, the fair value of the contingent consideration was $16,007.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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