Organigram Holdings has announced a C$221 million strategic investment from a wholly-owned subsidiary of BAT. The BAT subsidiary has subscribed for approximately 58.3 million common shares of Organigram, which represents a 19.9% equity interest on a post-transaction basis for total proceeds of approximately C$221 million at a price per share of C$3.792, based on a five-day volume weighted average price on the TSX ending March 9, 2021.
Organigram and BAT have also entered into a Product Development Collaboration Agreement pursuant to which a “Center of Excellence” will be established to focus on developing the next generation of cannabis products with an initial focus on CBD. The Center of Excellence will be located at Organigram’s indoor facility in Moncton, New Brunswick, which holds the Health Canada licenses required to conduct research and development activities with cannabis products. Both companies will contribute scientists, researchers, and product developers to the Center of Excellence which will be governed and supervised by a steering committee consisting of an equal number of senior members from both companies. Under the terms of the PDC Agreement, both Organigram and BAT have access to certain of each other’s intellectual property (“IP”) and, subject to certain limitations, have the right to independently, globally commercialize the products, technologies and IP created by the Center of Excellence pursuant to the PDC Agreement.
“This is a tremendous milestone in the evolution of Organigram. It is instrumental in advancing our commitment to offering consumers innovative cannabis products and to furthering our long-term international strategy,” said Greg Engel, Chief Executive Officer of Organigram. “We have been extremely selective about aligning with a strategic partner and, in BAT, we’ve found a leading consumer goods business with sophisticated management, innovative product platforms, an impressive dedication to research and development, deep consumer insights, regulatory expertise and a commitment to responsible stewardship and consumer safety among many other enviable attributes. This collaboration is the culmination of extensive discussions and workshops and in-depth due diligence.”
Dr. David O’Reilly, Director, Scientific Research at BAT, commented: “Today’s announcement underscores BAT’s commitment to accelerating our transformation and building A Better Tomorrow. Our multi-category, consumer-centric approach, which is key to our transformation, aims to provide choice and meet the evolving needs of adult consumers. Choice that provides reduced risk alternatives2 to combustible cigarettes, as well as going beyond tobacco and nicotine into new and exciting areas of product innovation.
We believe this collaboration has significant potential to enhance our activities, allowing us to combine our world-class expertise while enabling scientists from both BAT and Organigram to work closely together and share information real-time. We know that in R&D this is how you make real breakthroughs and accelerate progress.
We have been impressed by the strong management team and culture at Organigram. This collaboration aligns with our long-term strategy and will enable us to work with Organigram at an R&D level, as well contributing to their wider operations.”
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Organigram
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