Shares of Tilray Inc. /zigman2/quotes/209129655/composite TLRY -0.60% shot up 8.2% in premarket trade Monday, after the Canada-based cannabis company announced an agreement that extends the lock up, and provide for the orderly sale, of the 75 million shares, or 77% of the Tilray shares outstanding, held by its largest shareholder, Privateer Holdings. Inc. Under terms of the letter of intent, Privateer will merge with a wholly-owned subsidiary of Tilray, with Privateer stockholders receiving newly issued Tilray shares equal to the number of Tilray shares currently held by Privateer. Once the merger is completed, all Tilray shares held by Privateer will be cancelled. The Tilray shares distributed in the merger will be subject to a lock-up agreement that allows for the sale of shares "only under certain circumstances" over a two-year period. "During the first year following the closing of the merger, shares will be released only pursuant to marketed offerings and/or block trades to institutional investors or via stock sales to strategic investors, all of which would be arranged at the sole discretion of Tilray," Tilray said in a statement. "The remaining shares will be subject to a staggered release over the course of the second year following closing." Tilray's stock has tumbled 44.6% over the past three months through Friday, while the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.37% has gained 4.8%.