A recent press statement indicates plans by Tilray Inc. (NASDAQ:TLRY) to acquire Natura Naturals Holdings Inc. According to the deal, Tilray will pay out an upfront sum of C$35 million immediately once the deal closes. Since Natura owns a fully licensed cannabis cultivator, Tilray will have unbridled access to the Canadian cannabis cultivation sector.
Natura’s subsidiary owns a cannabis cultivation facility that covers a total of 662,000 sq. ft. Notably, only 155, 000 sq. ft. of the total possess an operational license from Canadian authorities. The $35 million upfront will comprise $15 million in cash and the rest will be in Tilray’s common stock. Further, the total worth of the deal could climb to C$70 million subject to some conditions.
Tilray wants to provide high-quality cannabis products
The two companies agreed that Natura will be due for extra payment amounting to C$35 million on achievement of certain milestones. Natura will have to score favorable quarterly production milestones in the next 12 months after the deal closes. If Natura achieves the targets, Tilray will pay a further $35 million in Class 2 common stock.
Brendan Kennedy, Tilray President and CEO, expressed satisfaction in the ongoing developments. He said the completion of the deal will allow Tilray more capacity to service the fast-growing cannabis market. Further, he noted that the acquisition will facilitate the firm’s strategy that entails provision of high quality cannabis products.
Positive share performance
“Through an extensive and thorough search for the right supply partner, we’re pleased to have come to a mutually-beneficial agreement with Natura,” Kennedy said.
Interestingly, Tilray shares edged up 3% in the premarket this morning in the immediate aftermath of the news. Notably, the surge comes after another premarket surge when the firm’s largest shareholder indicated the intention to hold the shares for longer.
Privateer Holdings owns a majority of Tilray’s outstanding shares by up to 76%. According to the private equity group, Tilray has a robust growth strategy as well as the first mover advantage. As such, the firm expects Tilray to continue posting favourable revenue growth for at least the whole of 2019.
