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.
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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.
