Organigram (OGI) shares surge on cannabis product deal with British American Tobacco11 Mar 2021 12:46
Mar. 11, 2021 6:32 AM ETOrganiGram Holdings Inc. (OGI)By: Mamta Mayani, SA News Editor
Organigram Holdings (NASDAQ:OGI) soars 42% premarket on announcement of a C$221M strategic investment from a wholly-owned subsidiary of British American Tobacco (BAT) (NYSE:BTI).
The BAT subsidiary has subscribed for ~58.3M common shares of OGI, which represents a 19.9% equity interest on a post-transaction basis for total proceeds of ~C$221M at a price per share of C$3.792.
Organigram and BAT have also entered into a Product Development Collaboration (PDC) 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.
Under the terms of PDC Agreement, Organigram and BAT have agreed to jointly develop cannabis vapour products, cannabis oral products and any other products, IP or technologies the parties mutually agree to develop.
BAT will own all IP developed under this collaboration and will grant to Organigram a royalty-free, perpetual, global licence to all such IP.
BAT’s investment in Organigram and the PDC Agreement is expected to strengthen Organigram’s balance sheet, accelerate its R&D program and product development activities and bolster its ability to enter the U.S. and other international markets.
Seeking Alpha contributor Individual Trader laid out a nuanced bullish case for the stock last month.