Canadian cannabis company Tilray (TLRY) - Get Report announced it signed a definitive merger agreement with Privateer Holdings, its largest shareholder, that will extend the lock-up period and provide for the issuance of up to 75 million Tilray shares to Privateer's equity holders. 

The deal also cancels the 75 million shares that are currently owned by Privateer. The shares, which represent 77% of Tilray'ss total outstanding, will be released over an extended two-year period. 

As part of the deal, the two parties will effect a downstream merger of Privateer with a wholly-owned subsidiary of Tilray, with the Tilray subsidiary surviving the merger and Privateer equity holders receiving the newly issued shares of Tilray common stock. 

Privateer was Tilray's initial incubator and financier before the company's initial public offering in July 2018. Earlier this year, Privateer distributed ownership in its three non-Tilray subsidiaries directly to its stockholders, leaving the private-equity firm with just Tilray assets in its portfolio. 

Privateer shareholders receiving the new issuance of stock will only be able to sell their shares "under certain circumstances" over a two-year period. 

Tilray CEO Brendan Kennedy also the CEO of Privateer. 

Tilray shares were rising 2.6% to $32.88 in premarket trading Monday.