Organigram Stock Rallies On $124.6 Million Investment from British American Tobacco Subsidiary

TORONTO- In a significant financial development, Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI) has secured a substantial investment of $124.6 million from BT DE Investments Inc., a subsidiary of British American Tobacco (NYSE: BTI). This momentous infusion of funds is poised to catalyze Organigram’s growth and foster innovative product ventures.

The financial injection arrives at a juncture where several companies with ties to the cannabis industry are cautiously venturing back into early-stage investments. This trend is likely a response to the growing clarity in the U.S. government’s stance on the future of cannabis.

Beena Goldenberg, CEO of Organigram, lauded the deal as “transformative” and expressed her enthusiasm for its implications. She emphasized how this investment would further bolster Organigram’s already robust financial standing, cementing its position as a frontrunner in the cannabis sector.

The investment has a twofold objective: first, to empower Organigram to expand its global footprint, and second, to ramp up research and development endeavors. Organigram’s partnership with British American Tobacco, established in March 2021, has yielded considerable advancements in product development, especially in the realm of non-combustible cannabis products.

With this substantial capital infusion, Organigram intends to launch “Jupiter,” an investment pool strategically focused on emerging cannabis markets. This strategic move aims to capitalize on the burgeoning global trend of cannabis legalization and leverage opportunities within potentially undervalued cannabis enterprises.

Paolo De Luca, Organigram’s Chief Strategy Officer, underlined the growing scope within the cannabis industry and the allure for investments. He emphasized that the fiercely competitive nature of the industry requires companies with strong financial foundations, industry experience, and a track record of successful mergers and acquisitions.

“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,” De Luca stated.

Under the terms of the agreement, British American Tobacco will purchase 38,679,525 shares of Organigram in three installments, with the first tranche of over 12 million shares scheduled for January 2024. To prevent an undue concentration of voting power, additional shares will be non-voting, convertible preferred shares if BAT’s stake surpasses 30%.

The transaction will be subject to approval by a majority of the minority shareholders and is slated for discussion at Organigram’s annual and special shareholders’ meeting in early 2024.