Tilray Asks Shareholders To Approve Dilution

Tilray, Inc. (NASDAQ: TLRY) distributed a proxy statement, which included an open letter to shareholders from CEO Irwin Simon. The company wants to increase the number of authorized shares of common stock, so that it may use its stock to acquire and finance attractive businesses that Tilray says will help it grow and create value for stockholders. Tilray is also asking stockholders to approve certain amendments and modifications to Tilray’s organizational documents to provide for increased shareholder rights.

The proposals are to be voted on at the Special Meeting of Tilray stockholders, scheduled for July 29, 2021. the company currently has 446 million shares outstanding and a market cap of over $8 billion. The company also has $425 million in cash on hand.

So far, it seems shareholders don’t mind the plan. Shares were trading slightly higher in early trading. The cannabis industry has had a busy year for mergers and acquisitions. According to Viridian Capital, they have tracked 156 transactions year-to-date in 2021, compared to 35 in the same period last year. Public companies were the buyers in 83% of 2021 deals YTD compared to 91% in 2020.

The text of the letter is as follows:

Dear Fellow Shareholders,

We need your help to ensure Tilray grows – and to ensure YOU are able to participate in our success in a meaningful, constructive manner. Please take a few minutes to read this letter, the accompanying materials detailed in the proxy, and then submit your vote online, by telephone, or mail.

Through our recent combination with Aphria Inc., we have ushered in a new era for the global cannabis industry. We now have the largest geographic footprint and leading cannabis-focused portfolio of consumer-packaged goods in the world.

We Have Substantial Growth Opportunities Ahead and We Need Your Support: To go from potential to performance, however, we need your help. Specifically, we will be addressing two important matters at the upcoming Special Meeting of Shareholders, both of which will be critical to driving value for our Shareholders. If you are a Shareholder of record as of June 22, 2021, you have the opportunity to vote on these proposals, which include:

  • Authorized Shares Proposal – Help Tilray Grow: This proposal would authorize additional shares of our common stock so that we can move quickly to accelerate growth through potential acquisition and financing opportunities. Importantly, approval does not mean that the authorized shares will be issued, only that they are available if needed in pursuit of these important corporate initiatives to drive shareholder value.
  • Governance Proposals – Expand Your Rights: Following the combination of Tilray and Aphria, our Board undertook a comprehensive review of our corporate governance, taking into consideration the views held by the investment community on important matters of governance. As a result, the Board is proposing to expand the rights of our Shareholders; but to do so, we need your approval on several amendments to our organizational documents.


Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.

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