Organigram Holdings Inc has extended its relationship with British American Tobacco PLC (LSE:BATS) boosting its financial strength and positioning it to expand beyond Canada.
The licensed producer of cannabis said BAT, the owner of Rothmans and Lucky Strike, is investing a further C$124.6 million in the business, building on an initial C$221 million injection back in 2021.
Organigram said the investment will allow it to extend its footprint beyond Canada, and also strengthen its financial position for long-term, sustainable growth.
“This investment bolsters an already strong balance sheet and solidifies our position as a leading cannabis company,” said Beena Goldenberg, chief executive of Organigram.
The firm said the deal enables it to invest in growing the topline of its core business, while optimizing operations to deliver on cost-saving efficiencies, thus accelerating earnings growth.
The majority of the investment will be used by Organigram to create a strategic investment pool, named Jupiter.
Jupiter will target investments in emerging cannabis opportunities that will enable Organigram to apply its industry-leading capabilities to new markets, it said.
The news was welcomed by the market with shares up 37% in pre-market trading.