BAT Invests $175.7M In Organigram To Work On Next-Gen CBD Products

Tobacco giant British American Tobacco PLC BTI opted to invest CA$221 million ($175.7 million) in OrganiGram Holdings Inc OGI

The company agreed to purchase some 58.3 million shares of Organigram's subsidiary at CA$3.792 each, representing a 19.9% equity interest.

The agreement also includes establishing a "Center of Excellence" dedicated to the development of cannabis products, with a focus on CBD.

According to Organigram, the center will be located at Organigram's Moncton, New Brunswick-based indoor facility that holds Health Canada licenses for research and development operations with cannabis products.

In addition, both parties opted to support the new venture by appointing its scientists, researchers, and product developers to serve at the new center.

The committee consisting of senior members from both companies will oversee the operations at the center.

Organigram CEO Greg Engel called the collaboration with BAT a "tremendous milestone."

"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," Engel explained.

Organigram also said that BAT's strategic investment in the company would boost its research and development and product development operations, as well as its growth opportunities, including entering the cannabis market in the U.S. and other international markets.