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

Barriere RCMP are asking, “Do you know who these people are?”

RCMP are hoping someone will recognize the people in these photos who… Continue reading

Barriere RCMP looking for alleged AG Foods shoplifter

RCMP are requesting help in identifying a woman who departed the AG… Continue reading

Valley Voices From The Past: Early policing in the North Thompson Valley

By Nelson Hindle The following is an excerpt from Upper North Thompson… Continue reading

Welcoming the hot weather with a trip to the Splash Pad

The final arrival of scorching temperatures these past few weeks, with Barriere… Continue reading

District of Barriere Utilities Manager reports to council on Barriere wells

District of Barriere Utilities Manager Ian Crosson presented a verbal report during… Continue reading

B.C. records 30-50 new COVID-19 cases a day over weekend, no new deaths

Many of those testing positive were identified by contact tracing for being linked to other confirmed infections

Five B.C. First Nations call out Canada for ‘discriminatory’ food fish practices

West Coast nations say government ignoring court-won right to chinook and coho

Salmon arrive in larger numbers at Big Bar landslide

Arrival follows historic hihg-water levels that halted migration runs

Rent-relief program becomes new front in fight between Liberals, opposition

Opposition trying to draw parallels between decision to have Canada Mortgage and Housing Corp. run program and the WE controversy

Ottawa sets minimum unemployment rate at 13.1% for EI calculation

Statistics Canada says the unemployment rate was 10.9 per cent in July

$45K in donations received after couple’s sudden death in Tulameen

Sarah MacDermid, 31, and Casey Bussiere, 37, died August long weekend

Famous Yukon-based bhangra dancer brings movements of joy to Long Beach

Internet-famous dancer is exploring Vancouver Island, visiting the B.C. Legislature and more

Battle of Fairy Creek: blockade launched to save Vancouver Island old-growth

‘Forest Defenders’ occupy road to prevent logging company from reaching Port Renfrew-area watershed

Most Read