British Columbia-based Tilray plans to buy Natura Naturals Holdings for up to 70 million Canadian dollars ($52 million) to significantly increase its Canadian cannabis footprint.
Natura Naturals – a subsidiary of Natura Naturals Holdings – owns one of Canada’s 126 cannabis cultivation licenses.
Under the terms of the definitive agreement, Tilray said it will deliver CA$35 million at closing, including CA$15 million in cash and CA$20 million in Tilray Class 2 common stock.
Another CA$35 million in Tilray stock may become payable if Natura reaches quarterly production milestones over the following 12 months, Tilray said in a news release.
Tilray – owned by Privateer Holdings, a cannabis-focused private equity firm in Seattle – trades on the Nasdaq as TLRY.
Purchasing Natura would roughly double Tilray’s Canadian cultivation capacity, according to Cowen analyst Vivien Azer.
“The company’s supply agreements with third-party farmers continue to disappoint on product quality,” she wrote in an investor note. “The Natura transaction will allow TLRY to significantly expand its capacity.”
Natura Naturals – located in Leamington, Ontario – has 155,000 square feet of greenhouse space currently licensed but is capable of expanding to 662,000 square feet within the facility, Tilray said.
The deal is expected to close in the next 30 days.
A fairness opinion was provided to Tilray’s board of directors in connection with the transaction by New York-based investment bank Cowen.