Why Tilray Shares Are Lighting Up

Tilray Inc. (NASDAQ: TLRY) shares jumped on Monday after the firm announced that it had signed a letter of intent with its largest stockholder, Privateer Holdings, for a transaction that will extend the lockup on and provide for the orderly release of the 75 million Tilray shares held by Privateer to Privateer’s equity holders.

It’s worth pointing out that these shares currently represent 77% of Tilray’s total shares outstanding.

Under the terms of the letter of intent, the parties will effect a downstream merger of Privateer with and into a wholly-owned subsidiary of Tilray, with the Tilray subsidiary surviving the merger, and the issuance by Tilray to Privateer stockholders of newly issued and registered shares of Tilray common stock in an aggregate amount equal to the number of Tilray common shares currently held by Privateer.

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Mark Castaneda, chief financial officer of Tilray, commented:

We appreciate the long-term confidence that Privateer has in the Tilray business and we look forward to having their investors as part of our stockholder base. We believe this transaction will give Tilray greater control and operating flexibility, while allowing us to effectively manage our public float.

Shares of Tilray traded up about 11% Monday morning to $43.23, in a post-IPO range of $20.10 to $300.00. The consensus price target is $98.00.

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