Tilray (TLRY) shares soared more than ten percent after the cannabis company announced it was purchasing 8 beer and beverage brands from Anheuser-Busch InBev (BUD). Shock Top, Blue Point Brewing, and HiBall Energy are just some of the brands Tilray is acquiring. The deal is expected to close later this year. Yahoo Finance breaks down the stock's action.

Video Transcript

- Well, we are also watching shares of Tilray this morning. The company announced an acquisition of eight AB InBev brands. They include Shock Top, Red Hook Brewery, and Hiball Energy. That deal is projected to triple the size of Tilray's beer portfolio. The company expects output to increase from 4 million to 12 million cases annually, and this sort of continues in the company's roll-up strategy.

- I mean, this is something we have seen Irwin Simon, the CEO, do before. He did it at Hain Celestial, where he rolled up a bunch of different natural brands. Now, he seems to be building this sort of consumer products brand that initially was centered around cannabis, but now we're seeing more forays into alcohol.

- I think it's a good strategic move here. I mean, we think about our own internal executive editor Brian Sozzi, who has a Hiball Energy on his desk just about every day. And there's a strong customer base out there that wants to make sure that they get that jolt in the morning.

Outside of that, you've got the other end of the market. Those that are looking to chill out a little bit later on in the day through one of the other-- what is it? The Reds? Anyway, the-- I know you mentioned it a moment ago, I just-- the name is escaping me.

But now that we think about how they're going to kind of set their own positioning through these beverages over the course of the day to say, OK, we can be in your energized or ramp up part of the day or we could be in your kind of comedown or your relaxation part of the day. I think it's a good strategic play.

I think the company already has brand equity in the name alone. When people find out that it's all pulled into the same brand, there is still going to be the lingering question of, OK, so how far away are they from making sure that there's potentially some cannabis infusion of all of these different drinks?

- I believe they have they're in that business as well.

- They own, yeah.

- And I guess the other question is cannabis has proven to be a very volatile business, so does this help them smooth that out more and provide a more steady source of revenue on the beer side, perhaps? I guess we'll find out.

- Yeah.