Organigram and BAT deepen partnership through C$124.6 million investment with 38.7 million shares to be issued over three tranches
Organigram to use C$83.1 million of the investment to create “Jupiter,” a strategic investment pool designed to expand Organigram’s geographic footprint and capitalize on emerging growth opportunities
C$41.5 million of the investment will be used for general corporate purposes
Investment enhances strategic Product Development Collaboration between BAT and Organigram, which focuses on cutting-edge R&D and product innovation
BAT to increase voting Common Share ownership position to 30% and overall equity interest to 45% (including non-voting Class A Preferred Shares)
TORONTO — Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI), (the “Company” or “Organigram”), a leading licensed producer of cannabis, is pleased to announce a C$124.6 million follow-on strategic equity investment from BT DE Investments Inc., (the “Investment”), a wholly-owned subsidiary of BAT (LSE: BATS and NYSE: BTI) (“BAT”), a leading, multi-category consumer goods business with a purpose to build A Better Tomorrow.™
“We are excited to bring this transformative transaction to Organigram’s shareholders, reinforcing our commitment to delivering shareholder value. This investment bolsters an already strong balance sheet and solidifies our position as a leading cannabis company. In addition, this deepens the strategic partnership between Organigram and BAT, and we look forward to continuing to leverage BAT’s global capabilities and scientific expertise,” said Beena Goldenberg, CEO of Organigram. “Jupiter, the strategic investment pool, is expected to accelerate Organigram’s ambitious growth plans, enabling further geographic, technological and product expansion.”
Strengthening Organigram’s Position to Deliver Results
This investment will not only allow Organigram to deliver on its stated ambition to extend its footprint beyond Canada, but also strengthens its financial position for long-term, sustainable growth. This further enables Organigram to invest in growing the topline of its core business, while optimizing operations to deliver on cost saving efficiencies, thus accelerating earnings growth. The flexibility afforded to the Company by this investment will provide incremental capital to Organigram to pursue new opportunities and expand on existing initiatives aimed at fueling net revenue growth and achieving EBITDA objectives.
Through this investment, Organigram aims to capitalize on its state-of-the-art facilities, support further workstreams in R&D and product development and deliver impactful product launches. As a result of this, Organigram is poised to deliver further market share gains in this rapidly consolidating market where the Company was able to achieve a #2 market position in Canada over the last two months1.
Building on the Foundations of the Product Development Collaboration (PDC)
Since March 2021, Organigram’s partnership with BAT has gone from strength-to-strength, most significantly the progress achieved as part of the PDC agreement. Organigram’s commercial business is already seeing significant benefits both from a scientific development standpoint and in terms of revenue driving product capability.
This transaction furthers BAT’s support of Organigram as a trusted partner and accelerates the focus on innovative cannabis science and R&D outside of combustibles. The PDC is now in late-stage development of a suite of emulsions, novel vapour formulations, flavour innovations, and packaging solutions which are planned to be applied to certain products within Organigram’s portfolio in calendar 2024. We expect these innovations to deliver market share and revenue growth for Organigram, appealing to a broad range of adult consumers seeking new, progressive cannabis formats with efficacious results.
“Jupiter” Strategic Investment Pool Will Accelerate Organigram’s Growth Ambitions
The majority of the C$124.6 million investment will be used by Organigram to create a strategic investment pool, named Jupiter. Jupiter will target investments in emerging cannabis opportunities that will enable Organigram to apply its industry-leading capabilities to new markets. Management has identified that geographic expansion is a strategic priority and this opportunity presents the Company with the capital to lay global foundations as the legal recreational cannabis market continues to see significant growth. Organigram maintains the highest level of regulatory and product stewardship and will continue to monitor the cannabis regulatory environment carefully. As a result, all potential investments will undertake rigorous legal compliance and due diligence processes.
“The opportunity set within the cannabis space has grown significantly since our initial collaboration with BAT in March 2021 and the category continues to expand globally as more adult consumers incorporate cannabis into their lives. The competitive nature of the industry also means that the opportunity for investments is ample for companies with strong balance sheets, industry experience and a proven track record of M&A success,” said Paolo De Luca, Chief Strategy Officer of Organigram. “Organigram’s expertise and continued success in the cannabis industry means that we are well placed to bring best-in-class capabilities to the investment sourcing and due diligence process, as well as post-deal integration. All investments will be considered with Organigram’s long-term strategic vision in mind and with the goal of delivering incremental value to both the Company and our shareholders.”
SOURCE: Financial Post
