Tilray Inc. entered into a long-term revenue sharing agreement with Authentic Brands Group LLC to develop and market consumer cannabis brands.
The companies will use ABG's portfolio to offer consumer cannabis products globally, with an immediate focus on Canada and the U.S., subject to regulations. Tilray will supply the products' active cannabinoid ingredients.
ABG will receive an initial US$100 million, as well as up to US$250 million in cash and stock, subject to the achievement of certain commercial and regulatory milestones.
Additionally, Tilray will be eligible to receive up to 49% of net revenues from cannabis products bearing ABG brands, and is guaranteed to receive a minimum payment of up to US$10 million annually for 10 years if certain milestones are achieved.
BofA Merrill Lynch is acting as financial adviser to Tilray for the transaction, while Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal adviser to ABG.
Tilray provides medical cannabis in several countries. The Nanaimo, Canada-based company struck three partnerships in December 2018 to expand its portfolio and reach.
ABG has a global retail footprint of over 100,000 points of sale, as well as more than 4,500 branded freestanding stores and shop-in-shops. The New York-based company's portfolio generates about US$9 billion in retail sales annually.