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Tilray jumps after $166 million deal for stake in MedMen to step into the US retail cannabis market

MedMen
MedMen store employees serve customers buying marijuana in West Hollywood, California.

REUTERS/Lucy Nicholson

  • Tilray surged early Wednesday after reaching a $165.8 million investment deal with MedMen.
  • Tilray is investing in MedMen to position itself into the US retail market for cannabis should it be legalized on the federal level.
  • The Canadian company is making the investment through acquiring convertible notes and warrants.
  • See more stories on Insider’s business page.

Tilray shares surged by nearly 10% early Wednesday after the Canadian cannabis cultivator and distributor said it has invested in MedMen to position itself in the US retail market if and when cannabis is legalized on the federal level.

Shares of Tilray gained as much as 9.5% to $14.36 during premarket trade then trimmed the advance to 7.5%. The stock this year has gained about 59% through Tuesday’s session. In May, Tilray completed its merger with Aphria.

Tilray along with other investors in a newly formed limited partnership bought 75% of MedMen’s outstanding senior secured convertible notes originally held by private equity firm Gotham Green Partners, and 65% of outstanding warrants for $165.8 million.

MenMed runs more than 25 stores in six states, including California, the biggest market worldwide. Tilray called MedMen one of the most recognized brands in the $80 billion US cannabis market.

“Backed by accelerating trends towards legalization globally, we are focused on building the world’s leading cannabis-focused consumer branded company with a goal of $4 billion of revenue by the end of our fiscal 2024,” said Irwin Simon, Tilray’s chairman and CEO, in a statement.

The MedMen investment “is a critical step towards delivering on our objective as we work to enable Tilray to lead the US market when legalization allows,” he said.

Tilray said it will issue 9 million shares of its common stock to Gotham Green Partners pending approval by shareholders. A special shareholders meeting will be held on Thursday. If Tilray hasn’t received shareholder approval by Dec. 1, Gotham Green Partners may receive cash rather than Tilray shares.

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Retail traders are cheering on Tilray’s 27% pop after the cannabis company’s first earnings report since merging with Aphria

Tilray marijuana

Tilray

  • Retail traders are cheering on Tilray’s 27% stock pop on Wednesday after the cannabis company turned in its first earnings report since merging with Aphria.
  • A Wall Street Bets post highlighted that the cannabis company increased EBITDA 285% year over year.
  • Tilray is far from it’s 2018 all-time highs but many retail traders seem optimistic the stock will rally “to the moon.”
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Retail investors on Wednesday cheered Tilray’s 27% single-day stock pop after the cannabis company recorded its first quarter of earnings after merging with Aphria.

The Toronto, Ontario-based firm jumped to an intraday high of $16.18 Wednesday, the highest point in over two weeks, but still well below its post-IPO record of $300 in 2018.

“$TLRY this is going back to $150. Buy and hold!” one user said in Stocktwits. Another commented that the stock had potential to be “life-changing.” Tilray was trending #1 on Stocktwits Wednesday morning.

The cannabis company posted net income of $33.6 million for the fiscal fourth quarter, compared to a loss of $84.3 million from the prior year. EBITDA nearly quadrupled to hit $12.3 million.

“Still down bad but we’re getting there. To the moon boyz!” one Reddit user commented on a WallStreetBet’s post highlighting the company’s 285% yoy adjusted EBITDA increase.

Tilray’s stock has fallen roughly 5% since it completed its merger with Aphria in May, but the company said it has already benefited from millions of dollars in cost savings from the combination.

“In a very short period of time since our business combination was finalized, we transformed and strengthened Tilray, delivered solid results amid continued COVID-19 lockdowns and restrictions and achieved $35 million in synergies to date – well on our way to delivering $80 million in cost savings over the next 16 months,” said Tilray CEO Irwin D. Simon.

Read more: These 5 stocks offer the most potential for a short squeeze this week for retail investors, according to Fintel

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