The cannabis cultivation company signed a non-binding letter of intent with Privateer Holdings Inc, the equity fund created by PayPal Holdings Inc (NASDAQ:PYPL) founder Peter Thiel, to sell its 77% stake in the company over the next two years.
The company’s stock jumped 13% to $44.06.
The agreement will allow Tilray to acquire its parent company later in what's known as a downstream merger. Privateer’s 75 million shares will be subject to a lock-up, meaning they can only be sold under certain circumstances.
For the first year, Tilray would have discretion over any sales of stock, with the remaining shares released on a staggered basis.
“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," CFO Mark Castaneda said. "We believe this transaction will give Tilray greater control and operating flexibility, while allowing us to effectively manage our public float.”
Privateer founded Tilray in 2013 and took San Jose business public in 2015.
–A previous version of this story incorrectly stated the Privateer held 77 million shares of Tilray stock, rather than 75 million–
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