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

Trio of pot shops to open in Castlegar by July, owners hope

Each trying to find a way to stand out from the pack

Host/creator of ‘Sport Fishing on the Fly’ shares destination portal

‘Sport Fishing on the Fly’ host Don Freschi hooks people up with the ultimate fly-fishing experience

Nakusp bust finds drugs, guns, stolen property

Woman released on promise to appear in court in October.

More passengers travelling through West Kootenay Regional Airport

First quarter reliability and passenger numbers up at Castlegar’s Airport

Castlegar council losing patience with Columbia Ave. contractor

Council wants outstanding items finished.

VIDEO: Rare white killer whale captured by drone near Campbell River

The transient orca has been named Tl’uk, a Coast Salish word that means ‘moon.’

B.C.-born Carey Price brings young fan to tears at NHL Awards banquet

Anderson Whitehead first met his hockey idol after his mother died of cancer

Licence issue delays boozing while cruising on BC Ferries

Planned June launch for alcohol sales delayed

B.C. school mourns after 13-year-old killed by fallen tree on field trip

Teenager died after being struck and pinned by tree while on a field trip near Sooke

B.C. temporarily halts resource development to protect caribou

The caribou population in northeastern B.C. has dwindled over the last two decades

Students disciplined after anti-LGBTQ signs posted in Kamloops high school

Vessy Mochikas, SD73’s principal for inclusive education, called incident a learning opportunity

‘The Fonz’ gives thumbs up in letter to dyslexic students at B.C. school

Students in Maple Ridge reached out to Henry Winkler after reading one his Zipster books.

Fernie’s Kerri Wall hopes to represent Green Party in federal election

Nelson’s Abra Brynne and Kaslo’s Judson Hansel have also chosen to run

Most Read