Tilray (TLRY) Stock Rises On Agreement With Largest Shareholder

Tilray TLRY Stock News

Tilray Inc (NASDAQ: TLRY) is gaining big in the market this morning after reaching a deal with its majority stakeholder. Of course, the deal excited investors who have pushed the stock up by more than 10% so far this morning. Here’s what’s going on:

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TLRY Reaches Agreement With Majority Shareholder

As mentioned above, Tilray is having a great day in the market today after announcing that it has entered into a new agreement with Privateer Holdings, the company’s largest shareholder. According to the agreement, Privateer will be selling its remaining stake in TLRY back to the company over the next 2 years.

The transaction is being dubbed a downstream merger. Essentially, this is a merger in which a partially owned subsidiary takes over its parent company. In this case, Tilray will be taking over Privateer.

Interestingly, the deal will allow for around 75 million shares of TLRY to be released over the next two years. The move follows a letter of intent that will extend lock-up and provide for the orderly release of 75 million shares of the company held by Privateer.

Privateer, a private equity holding company with a strong focus in the cannabis sector, formed TLRY back in 2013. In the release, Tilray said that shares will be sold to institutional and strategic investors that will be determined by Tilray in the first year. In the second year, remaining shares will be released at a staggering rate.

Great News For TLRY And Its Investors

This is very big news for Tilray. That’s because, on January 15, 2019, the lock up period that restricted Privateer from selling its approximately 77% stake in the company ended, proving to be a pivotal time for the company.

However, short-sellers have been betting that Privateer and Tilray would have a hard time reaching an agreement that would lead to the gradual offloading of these shares. As a result, the stock has been on a downward trend.

Nonetheless, this news alleviates that risk. With the agreement in mind, the lock-up period is extended and a plan for releasing these shares that will protect the value that current investors hold has been created. All in all, TLRY investors are jumping for joy as one of the biggest short-term risks to the stock is no longer a concern.

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Final Thoughts

Tilray is one of the largest cannabis companies in the world with a strong hold in Canada, an impressive global presence and a leadership position in the industry. As the cannabis sector continues to evolve, the opportunity here is only rising. Now, with the agreement with Privateer in place, one of the largest risks to TLRY stock is behind us.

What Do You Think?

Where do you think TLRY stock is headed moving forward? Join the discussion in the comments below!

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