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.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

End of an Era: Tofino hair studio closes shop

“We were getting excited to start ramping up and then all of sudden we had to close our doors.”

Vancouver Island’s current COVID-19 case count officially hits zero

Of the 130 recorded Island Health cases, five people have died, 125 recovered

Alberni Valley, West Coast First Nations gather to remember woman fatally shot by police

Nuu-chah-nulth Tribal Council requests an independent investigation

Tla-o-qui-aht First Nation woman, 26, fatally shot by police in Edmundston, N.B.

Police were conducting a well-being check at the time of the incident

Ucluelet’s Wild Pacific Trail ventures online to inspire self-isolators

“Because of COVID-19, we could not do in-person naturalist programs.”

‘I’m pissed, I’m outraged’: Federal minister calls out police violence against Indigenous people

Indigenous Minister Marc Miller spoke on recent incidents, including fatal shooting of a B.C. woman

Kelowna Mountie who punched suspect identified, condemned by sister

‘How did he get away with this? How is this justifiable?’

PHOTOS: Anti-racism protesters gather in communities across B.C.

More protests are expected through the weekend

Pair accused of ‘horrific’ assault at Vancouver’s Oppenheimer Park at large

Police say Jason Tapp, 30, and Nicole Edwards, 33, did not show up to meet their bail supervisor this week

No charges to be laid against 22 northern B.C. pipeline protesters

Twenty-two people were arrested in February, but Crown has decided not to pursue charges

Plan in place for BC Ferries to start increasing service levels

Ferry corporation reaches temporary service level agreement with province

B.C. starts to see employment return under COVID-19 rules

Jobless rate for young people still over 20% in May

Alert Bay resident carves tribute to his community kicking COVID-19’s butt

‘Our little village crushed the curve with love and commitment’

Most Read