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

Your Mountain Minute

Your weekly news recap… Continue reading

Black Press Kootenay Career Fair underway in Cranbrook

Today, Thursday, August 22, around 40 employers will be waiting to meet potential new employees

Elk River reclaims property as its own

Laws make it harder to protect private land than ever before says farmer, local government

GADSAR receives funding for building upgrades

Golden Star staff Columbia Shuswap Regional District directors unanimously approved an application… Continue reading

Rossland council urges minister to kill Jumbo Glacier Resort project

Mayor writes letter panning ski resort on environmental, legal, and economic grounds

B.C. sockeye returns drop as official calls 2019 ‘extremely challenging’

Federal government says officials are seeing the same thing off Alaska and Washington state

Expanded support to help B.C. youth from care attend university still falling short

Inadequate support, limited awareness and eligibility restrictions some of the existing challenges

Ethnic media aim to help maintain boost in voting by new Canadians

Statistics Canada says new Canadians made up about one-fifth of the voting population in 2016

Cross-examination begins for B.C. dad accused of killing young daughters

Andrew Berry is charged in the deaths of six-year-old Chloe and four-year-old Aubrey in 2017

Dog attacked by river otters, Penticton owner says

Marie Fletcher says her dog was pulled underwater by four river otters in the Penticton Channel

BC SPCA overwhelmed with cats, kittens needing homes

Large number of cruelty investigations, plus normal ‘kitten season’ to blame

B.C. Hydro applies for rare cut in electricity rates next year

Province wrote off $1.1 billion debt to help reverse rate increase

Speculation tax forces sale of Greater Victoria’s iconic ‘Tulip House’

Bob and Jan Fleming selling their retirement home famous for its thousands of tulips

Most Read