Tilray (TLRY) stock has surged today, rising 11.3% as of 11:00 AM Eastern Time. The surge came after the company announced it has signed a letter of intent with one of its shareholders, Privateer, to extend a lockup on Privateer stock. The move prevents Privateer’s ~75 million shares from flooding the market. Instead, Privateer stock will be released in an orderly fashion over two years.
Tilray stated that it “will effect a downstream merger of Privateer with and into a wholly-owned subsidiary of Tilray, with the Tilray subsidiary surviving the merger,” adding that “all Tilray shares held by Privateer and all outstanding Privateer common stock will be cancelled upon consummation of the merger.”
According to Tilray, Privateer accounts for ~77% of Tilray’s total outstanding shares. If these shares were to be sold to the market as soon as the lockout ended, there would be a significant increase in supply.
Tilray’s peers have also risen today—Aphria (APHA) has risen 3% and Aurora Cannabis has gained 2.3%. The cannabis sector benchmark, the Horizons Marijuana Life Sciences ETF (HMMJ), has risen ~2.2%.