Organigram secures C$65.2 million BAT investment for Sanity acquisition

Organigram Global Inc. (NASDAQ: OGI) (TSX: OGI) announced it entered into a subscription agreement with BT DE Investments Inc., a subsidiary of British American Tobacco p.l.c. (LSE: BATS) (NYSE: BTI), for a C$65.2 million private placement investment connected to its proposed acquisition of Sanity Group GmbH.

The investment comprises BAT subscribing for 14,027,074 shares at C$3.00 per share for C$42.08 million, plus exercising existing top-up rights for 9,897,356 shares at C$2.34 per share for C$23.12 million. The shares are priced at an average of C$2.72 per share.

Organigram will use the proceeds, along with cash on hand and a previously announced C$60 million credit facility with ATB Financial, to fund the cash portion of the Sanity acquisition, transaction expenses and working capital.

Due to ownership thresholds, BAT would receive 2,353,379 common shares and 21,571,051 non-voting preferred shares from the private placement, based on Organigram's 135,132,782 common shares outstanding as of December 31, 2025. The preferred shares convert to common shares on a one-for-one basis initially, with the conversion rate increasing 7.5% annually until BAT would own 49% of outstanding common shares.

The transactions require disinterested shareholder approval under Toronto Stock Exchange rules, as the shares to be issued exceed 25% of current outstanding shares and the consideration to BAT exceeds 10% of Organigram's market capitalization. Organigram's board unanimously approved both transactions on February 18, with BAT nominees abstaining.

Shareholders will vote on the acquisition and private placement at Organigram's annual meeting scheduled for March 30, 2026. The closing remains subject to regulatory approvals, including TSX approval and German foreign direct investment clearance.

BAT currently holds 40,134,389 common shares representing 29.7% of Organigram. Following completion of both transactions, BAT would hold 30% of common shares on a basic basis and up to 48.4% including preferred shares on a partially diluted basis.

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