Organigram Holdings, a Canadian cannabis company, experienced a surge in stock trading on Monday following the announcement of a substantial C$124.6 million investment from British American Tobacco (BAT).
At the time of this publication, OrganiGram Holdings Inc stock (OGI) has witnessed a surge.
OrganiGram Holdings Inc
Current Price: $1.47
Change : +0.31
Change (%): (26.72%)
Volume: 36.8M
Source: Tomorrow Events Market Data
Pending the necessary regulatory approvals, approval from Organigram’s shareholders, and fulfillment of other conditions, BAT is set to acquire 38.7 million shares at a price of CA$3.2203 per share, generating gross proceeds totaling CA$124.6 million, divided across three tranches.
Of this investment, the lion’s share, amounting to CA$83.1 million, will be allocated by Organigram towards the establishment of a strategic investment pool named “Jupiter.” The remaining CA$41.5 million will be earmarked for general corporate purposes. Jupiter’s primary focus will be on emerging opportunities within the cannabis sector, leveraging Organigram’s industry-leading expertise to penetrate new markets.
Organigram’s management has identified geographic expansion as a key strategic objective, and this investment provides the capital needed to establish a global presence in the rapidly expanding legal recreational cannabis market.
“Jupiter, the strategic investment pool, is expected to accelerate Organigram’s ambitious growth plans, enabling further geographic, technological, and product expansion,” noted Beena Goldenberg, CEO of Organigram.
This transaction solidifies BAT’s commitment to Organigram as a trusted partner, while also intensifying efforts in pioneering cannabis science and research and development beyond combustibles. It bolsters BAT’s voting Common Share ownership to 30% and overall equity interest to 45%, encompassing non-voting Class A Preferred Shares.
The initial tranche will see BAT subscribing for 12,893,175 million shares, with the closing expected around January 16, 2024, generating gross proceeds of CA$41.5 million. The remaining 25,786,350 shares will be subscribed for in two equal tranches, slated for approximately August 30, 2024, and February 28, 2025.
The Product Development Collaboration (PDC) is now in the advanced stages of developing a suite of emulsions, innovative vapor formulations, flavor advancements, and packaging solutions. These innovations are slated for integration into select products within Organigram’s portfolio in the calendar year 2024. Anticipated outcomes include increased market share and revenue growth for Organigram.
Since March 2021, Organigram’s partnership with BAT has demonstrated substantial progress, particularly within the framework of the PDC agreement.
Organigram is poised to leverage its cutting-edge facilities, bolster further research and development initiatives, and unveil impactful product launches. This strategic move also positions Organigram to extend its reach beyond Canada, fortifying its financial standing for sustained, long-term growth.
“This investment fortifies an already robust balance sheet and solidifies our standing as a leading cannabis enterprise,” emphasized Goldenberg, further stating “furthermore, it deepens the strategic alliance between Organigram and BAT, and we look forward to harnessing BAT’s global capabilities and scientific expertise.”
