Organigram Secures $124.6M Investment from British American Tobacco

Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI) received a big financial boost from a subsidiary of British American Tobacco (NYSE: BTI), the company announced Monday.

The company secured a $124.6 million injection from BT DE Investments Inc. to fuel growth and product innovation.

The news comes as more cannabis-adjacent companies start to dip their feet back into early investments, potentially due to signals from the U.S. government of a more solid position on the plant’s future.

In a statement, Beena Goldenberg, CEO of Organigram, expressed enthusiasm about the “transformative” deal.

“This investment bolsters an already strong balance sheet and solidifies our position as a leading cannabis company,” Goldenberg said.

The investment is aimed at empowering Organigram to expand its international presence and escalate research and development initiatives. Organigram’s partnership with British American Tobacco, established in March 2021, has since yielded advancements in product development, especially in non-combustible cannabis products, the company said.

With the infusion of capital, Organigram plans to establish Jupiter, an investment pool targeted at emerging cannabis markets. That move is expected to capitalize on the growing trend of cannabis legalization globally and harness potential undervalued cannabis enterprises.

“The opportunity set within the cannabis space has grown significantly since our initial collaboration … as more adult consumers incorporate cannabis into their lives,” Paolo De Luca, Organigram’s chief strategy officer, said in a statement. “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.”

He added, “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.”

According to the terms, British American Tobacco will purchase 38,679,525 shares of Organigram in three installments. The first tranche, with more than 12 million shares, is slated for January 2024. Should BAT’s stake exceed 30%, the additional shares will be non-voting, convertible preferred shares, ensuring BAT does not attain undue voting power.

The transaction will require a majority of the minority shareholder approval and is set to be discussed at Organigram’s annual and special shareholders’ meeting planned for early 2024.

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