Tilray Inc. has signed a deal that puts limits on how and when its largest shareholder may sell its stake in the cannabis company. Tilray President Brendan Kennedy is photographed at head office in Nanaimo, B.C., on November 29, 2017. THE CANADIAN PRESS/Chad Hipolito

B.C. pot company Tilray shares jump on deal with biggest shareholder

Privateer, backed by venture capitalist Peter Thiel, holds 75 million shares or roughly a 77 per cent stake

Tilray Inc.’s stock soared after it signed a deal to merge with its largest shareholder while also putting limits on the release of resulting new shares in the Canadian cannabis company for two years.

Under the agreement, U.S. private equity firm Privateer Holdings Inc. will become a subsidiary of the Canadian cannabis company. However, new Tilray shares distributed as a result of the merger would be subject to a lock-up, allowing for their release only under certain circumstances, the pot firm said.

Tilray shares soared as high as US$47.49 on the Nasdaq after the announcement, up roughly 22.4 per cent from its previous close of US$38.80. Shares were trading at US$46.39 by midday.

“We appreciate the long-term confidence that Privateer has in the Tilray business… We believe this transaction will give Tilray greater control and operating flexibility, while allowing us to effectively manage our public float,” said Tilray’s chief financial officer Mark Castaneda in a statement on Monday.

Privateer, backed by venture capitalist Peter Thiel, holds 75 million shares or roughly a 77 per cent stake in the Nanaimo, B.C.-based company.

Under the agreement, Tilray will acquire Privateer and its stake in the company in exchange for an equal number of new Tilray shares that will be issued to the U.S. private equity firm’s shareholders.

The new shares will be subject to a lock-up and may only be sold under certain circumstances over a two-year period.

During the first year, the shares will be released only in marketed offerings and/or block trades to institutional investors or via sales to strategic investors arranged at the sole discretion of Tilray. The remaining shares will be subject to a staggered release over the second year.

“We believe this structure will maximize overall returns for our visionary investors in a tax-efficient manner while giving Tilray the operating flexibility it needs to continue to be a leader in the rapidly emerging global cannabis industry,” said Michael Blue, managing partner of Privateer, in a statement.

Earlier this year, Privateer distributed its ownership of its three other operating subsidiaries, unrelated to Tilray, directly to its stockholders, the cannabis company said. The move left no material assets in Privateer other than the 75 million shares it currently holds in Tilray, it added.

The transaction effectively flips the control of a stock sale from Privateer to Tilray and provides the Canadian cannabis firm with the increased ability to manage its public float, said Vivien Azer, an analyst with Cowen and Company.

“In addition, the extended lock-up and conditions associated with the transactions reduces the risk associated with an excessive increase in TLRY’s public float,” she said in a note to clients.

ALSO READ: Tilray revenue soars nearly 200%, net loss grows in first quarter

The Canadian Press


Like us on Facebook and follow us on Twitter.

Just Posted

South Surrey woman promotes exercise to help fight Parkinson’s disease

‘This keeps me strong’ says Liz Holroyd Campbell, organizer of the 2019 Parkinson Superwalk

Four Terry Fox Runs planned for Surrey

Events to take place throughout city on Sept. 15

VIDEO: Young balance-bikers race through Surrey’s Civic Plaza at Strider Cup

The course has several obstacles including ‘Mount Scary’ and the ‘Noodle Monster’

‘Potentially life-threatening’ injuries in overnight Surrey crash

Police had Highway 10 between 180th and 186th streets closed for several hours

QUIZ: How much do you remember about Woodstock?

Weekend music festival in Bethel, New York, was held 50 years ago

Advocates ‘internationalize’ the fight to free Raif Badawi from Saudi prison

Raif Badawi was arrested on June 17, 2012, and was later sentenced to 1,000 lashes and 10 years in jail for his online criticism of Saudi clerics

RCMP, search crews hunt for 4-year-old boy missing near Mackenzie

George went missing early Saturday afternoon

Canadian entrepreneurs turning beer byproduct into bread, cookies and profits

Some breweries turn to entrepreneurs looking to turn spent grain into treats for people and their pets

Canada ‘disappointed’ terror suspect’s British citizenship revoked

Jack Letts, who was dubbed “Jihadi Jack” by the U.K. media, has been detained in a Kurdish prison for about two years

Chrystia Freeland condemns violence in Hong Kong, backs right to peaceful assembly

There have been months of protests in the semi-autonomous region

B.C. VIEWS: Log exports and my other errors so far in 2019

Plastic bags, legislature overspending turn out differently

‘It’s just the freedom:’ Paralyzed Broncos player pursuing life on the water

The former Humboldt Broncos goaltender, who started in the net when he was nine, was paralyzed last year

Most Read