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Organigram Announces ‘Transformative’ C$124m Investment From Tobacco Giant BAT

Canadian cannabis producer Organigram has announced a further major investment from tobacco giant British American Tobacco (BAT).

On November 06, 2023, Organigram revealed a new C$124.6m investment from BAT which it called a ‘transformative transaction’, bolstering its ‘already strong balance sheet’ and enabling it to accelerate its international growth plans.

The bulk of the investment (C$83.1m) is being put towards a new ‘strategic investment pool’ called Jupiter.

This new entity is set to target new investments in emerging cannabis opportunities in new markets, with the company stating that it has identified geographic expansion as a strategic priority.

According to the company, this deal provides the ‘capital to lay the global foundations as the legal recreational cannabis market continues to see significant growth’.

(Graphic: Business Wire)

Since BAT initially invested in Organigram in March 2021, the pair have also been working on a Product Development Collaboration (PDC). This new investment ‘accelerates the focus on innovative cannabis science and R&D outside of combustibles’.

A suite of ‘emulsions, novel vapour formulations, flavour innovations and packaging solutions’ are now reportedly in ‘late stage development’ thanks to the PDC.

The landmark deal, which has already reignited the debate around the extent to which cannabis companies should jump into bed with Big Tobacco, will see BAT increase its overall voting share ownership in Organigram to 30%, and overall equity interest to 45%.

Subject to approval from Organigram’s shareholders, BAT will subscribe for 38.7m shares in the NASDAQ-listed Organigram at a price of C$3.22 per share.

The gross proceeds will be paid in three tranches, with the first set to close in mid-January 2024 for gross proceeds of $41.5m.

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