Tobacco Giant Invests $30.8M In Cannabis Company: BAT Private Placement Second Of Three Tranches

Cannabis producer Organigram Holdings Inc. OGI OGI has closed the second of three tranches of the previously announced CA$124,559,674 ($92.3 million) follow-on strategic equity investment by BT DE Investments Inc., a wholly owned subsidiary of British American Tobacco plc, BTI on Tuesday.

Under the second tranche closing, the investor acquired Organigram's 4,429,740 common shares and 8,463,435 Class A preferred shares at CA$3.2203 per share, for gross proceeds of $30.8 million.

The company said on Tuesday that the remaining 12,893,175 shares subscribed for are due to be issued at the per-share price in the final tranche on or around February 28, 2025.

"With two tranches of the Jupiter pool now funded, combined with our strong balance sheet and targeted investment strategy, Organigram is well on its way to executing on its ambitious growth plan focusing on international, technological and product expansion," Paolo De Luca, chief strategy officer of Organigram. "Our inaugural Jupiter investment in Open Book Extracts marked our second investment in the U.S. market, and our first international investment in Sanity Group represents a significant first step in our ambitions to grow our footprint in the fast-growing German market."

Read Also: Organigram Reports 25% YoY Increase In Q3 Net Revenue, Significant Improvement In Adjusted EBITDA

• Get Benzinga's exclusive analysis and the top news about the cannabis industry and markets daily in your inbox for free. Subscribe to our newsletter here. If you're serious about the business, you can't afford to miss out.

The Deal Details

Organigram first announced a CA$124.6 million follow-on strategic equity investment from BAT's subsidiary in November 2023. In January 2024, Organigram shareholders voted to approve the investment from BAT, and the company completed the first of three tranches of the investment for proceeds of CA$41.5 million.

The investment allows Organigram to “fully leverage our world-class facilities, market leadership in several categories, and cutting-edge research and development capabilities to increase Organigram's reach both within the Canadian market and beyond," Beena Goldenberg, the company's CEO said earlier this year.

As previously announced, Organigram is using most of the investment to fund a strategic investment pool named Jupiter. This pool is designed to accelerate Organigram's international expansion and targets investments both overseas and in the U.S. Following the closing of the first tranche in January, Organigram has already made two important investments from the Jupiter Pool.

The first investment of $2 million was made in North Carolina-based hemp producer Open Book Extracts, while the second investment of €14 million ($15 million), was made in Sanity Group GmbH, a market leader in the fast-growing German medical market.

BAT initially invested approximately CA$221 million into Organigram in March of 2021, which had served to propel product innovations resulting from CoE at the company's Moncton facility.

Read Next:

• A $2 Billion Opportunity In Cannabis: How A Tobacco Giant Is Helping Organigram Seize The German Market

OGI Price Action

Organigram's shares traded 0.54% lower at $1.84 per share during the pre-market session on Tuesday morning.