MONCTON, N.B. – Organigram Holdings Inc. stock soared by more than 40 per cent Thursday as a subsidiary of one of the globe’s biggest tobacco companies purchased a stake in the business.<\/p>\n<\/p>\n
Organigram’s stock jumped by $1.45 to reach $5.07 on the Toronto Stock Exchange after British American Tobacco announced that its subsidiary will buy a 19.9 per cent stake in the Moncton, N.B.-based cannabis company for $221 million.<\/p>\n<\/p>\n
BAT, whose website advertises a portfolio of brands including Camel and Lucky Strike tobacco and Vype and Vuse vapour products, will buy 58.3 million Organigram shares at a price of $3.792 per share. <\/p>\n<\/p>\n
Chief executive Greg Engel said Organigram had long been looking for strategic partnerships with consumer packaged goods, beverage and alcohol companies and BAT’s offer came at the right time.<\/p>\n<\/p>\n
“Now there’s a significant injection of capital so that’s a key for us \u2026 to expand our own research and development efforts and for potential market expansion as we prepare to look at international markets,” said Engel.<\/p>\n<\/p>\n
As part of Organigram’s deal with BAT, the pair signed a product development collaboration agreement that will see the creation of a “centre of excellence.”<\/p>\n<\/p>\n
It will focus on developing the next generation of cannabis products with an initial focus on cannabidiol (CBD), a compound found in cannabis and hemp that doesn\u2019t produce a high but is believed to relax consumers.<\/p>\n<\/p>\n
Organigram has been delving into producing high quality chocolate and beverage products with CBD, but the centre will speed that up.<\/p>\n<\/p>\n
It will be located at Organigram\u2019s indoor facility in Moncton and both companies will contribute scientists, researchers, and product developers.<\/p>\n<\/p>\n
Engel expects the centre’s creation will involve some hiring.<\/p>\n<\/p>\n
Many staff at a townhall meeting Thursday morning were pleased at the announcement and are looking forward to working at the centre, Engel said.<\/p>\n<\/p>\n
“Any time you can say, ‘hey, we’re bringing this research hub to our facility, it generates a lot of interest and excitement among employees.’ “<\/p>\n<\/p>\n
BAT be entitled to add members to Organigram’s board.<\/p>\n<\/p>\n
The company, which was founded in 1902, has been encouraging people who smoke to switch completely to reduced-risk alternatives.<\/p>\n<\/p>\n
It has committed to providing adults with a wide range of enjoyable and less risky products.<\/p>\n<\/p>\n
It wants to increase the number of its non-combustible product consumers to 50 million by 2030.<\/p>\n<\/p>\n
This report by The Canadian Press was first published March 11, 2021.<\/p>\n<\/p>\n
Companies in this story: (TSX:OGI)<\/p>\n<\/p>\n
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