Organigram To Pay $36 Million For Quebec-Based Cannabis Producer
Organigram Holdings (TSX: OGI) evidently intends to fix its profitability issues by acquiring additional cultivation capacity in Canada. The firm this morning indicated it has acquired Laurentian Organic, a Quebec-based licensed producer.
The purchase does not come cheap, with Organigram paying a total of $36.0 million in initial consideration for the producer, with additional earnout agreements attached as well. Consideration includes $10.0 million in cash, while the remaining $26.0 million is to be settled via the issuance of 10.9 million common shares at a price of $2.39 per share.
Laurentian, like most small licensed producers, bills itself as a craft cannabis producer focused on a premium flower product as well as hash. Organigram has agreed to provide $7.0 million to the firm to grow its cultivation, processing and storage footprints, while also introducing automation.
The transaction is said to be immediately accretive, with the firm reportedly running at an annual run rate of $17.0 million in net revenues and an EBITDA run rate of $6.0 million, however those results are based on just the last two months of performance and are not trailing twelve month figures.
Organigram Holdings last traded at $2.38 on the TSX.
Information for this briefing was found via Sedar and Organigram Holdings. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.
