MONCTON, New Brunswick – Organigram Holdings Inc. (“OGI”, TSX: OGI and NASDAQ: OGI), the mother or father firm of Organigram Inc. (along with OGI, “Organigram” or the “Company”), a number one producer of hashish, is happy to announce it has acquired all the issued and excellent shares of The Edibles & Infusions Corporation (“EIC”) (the “EIC Acquisition”) for consideration of $22.zero million, plus as much as an extra $13.zero million in shares (the “Milestone Consideration”) payable upon the EIC enterprise reaching sure earnout milestones (the “Milestones”). The EIC Acquisition additional broadens Organigram’s continuum of product choices and gives an operational footprint in Western Canada.

EIC was co-founded by AgraFlora Organics International Inc. (CSE: AGRA) and James Fletcher, who’s the Chief Executive Officer of Cavalier Candies (“Cavalier”) – certainly one of Canada’s oldest confectionery firms. EIC constructed a purpose-built, highly-automated, 51,000-square-foot manufacturing facility situated in Winnipeg, Manitoba. The facility employs state-of-the-art tools designed to provide extremely customizable, exact, and scalable cannabis-infused merchandise, together with edibles. EIC presently holds a Research License and a Standard Processing License issued below the Cannabis Act and laws; it’s within the course of in of finishing its utility so as to add the exercise of sale of Cannabis 2.zero merchandise to its Standard Processing License. Until EIC receives its Sales License, it’s able to manufacturing merchandise in bulk for additional processing, evaluate and sale by Organigram or third-party licensed producers, for which it could present white-label providers.

The Company presently expects first gross sales of EIC manufactured comfortable chews in This autumn Fiscal 2021 topic to the timing of receipt and commissioning of sure ancillary tools, completion of high quality assurance documentation and hiring of requisite employees.

“EIC is an important acquisition to ensure Organigram is consistently at the forefront of cannabis product development. The integration of EIC will continue to provide our consumers access to innovative cannabis products while leveraging Organigram’s national sales and distribution network,” stated Greg Engel, Chief Executive Officer of Organigram. “Edible products remain an important product category to Organigram and EIC represents an ideal partner with which to expand our market presence in this category as well as other derivative cannabis categories. EIC’s commitment to research and development, continuous innovation, and its confectionery market leadership strategically aligns with Organigram’s domestic and international strategy. We value James Fletcher’s tremendous knowledge of confectionary manufacturing and proven track record of fulfilling the product needs of some of the world’s largest retailers at Cavalier Candies.”

“Organigram and EIC have enjoyed a collaborative partnership in working towards the closing of this transaction. Working with Organigram, we believe EIC can realize its full potential. Combining our complementary management expertise and business strengths will result in an integrated entity that is poised for further growth in Canada as well as globally in an expanding market for cannabinoid-infused products,” commented James Fletcher, President of EIC. “Our facility at EIC was designed to handle both smaller-batch artisanal manufacturing but, more importantly, large-scale nutraceutical-grade high-efficiency manufacturing with a view to gaining EU GMP certification as well. Indeed, the facility design and all of the equipment specifications were completed with that in mind.”

Strategic Rationale

“This acquisition, on the heels of the recently completed BAT transaction, provides strong strategic synergies for Organigram’s vision of developing innovative and novel products to serve the Canadian market and beyond,” stated Paolo De Luca, Organigram’s Chief Strategic Officer. “Diversifying our manufacturing and R&D base gives us increased ability to fast-track our near-term commercial plans as well as expand our R&D efforts in addition to those already destined for the Centre of Excellence in connection with BAT.”

Some key highlights supporting the strategic rationale embody:

Edibles class continues to develop. The edibles class presently represents roughly 4.4% of the Canadian leisure hashish market of which comfortable chews (and associated codecs) collectively are roughly 75%. This is a quickly rising section of the general Canadian market and the Company expects the Canadian market to step by step develop in direction of the 12%-15% and 85% edible and comfortable chew (and associated codecs) class share seen within the U.S. as new product choices are launched, and as regulatory adjustments unfold.

Unparalleled experience in CPG confectionery manufacturing and distribution. Through the EIC Acquisition, Organigram provides the management of an organization with roughly 100 years of lively operations in confectionery manufacturing to Organigram’s expertise-driven crew. The EIC administration crew additionally has expertise in supplying confectionery merchandise to over 20,000 places all through North America. EIC’s expertise producing and distributing on this scale is unmatched within the {industry} and ensures product achievement capabilities as hashish markets mature.

Premium purpose-built facility gives R&D capabilities for future product improvement. EIC’s facility is supplied with over 30,000 sq. toes of devoted manufacturing area in addition to a analysis and improvement laboratory. The facility’s customized developed depositor line permits cannabis-infused edible merchandise to be produced from uncooked supplies and hashish inputs with little human intervention. The facility will have the ability to make the most of state-of-the-art tools designed to exactly, and constantly, dose a spread of codecs with cannabinoids, guaranteeing regulatory compliance and client confidence inside a scalable and automatic setting. The R&D laboratory, coupled with EIC’s Research License, will enable Organigram to place itself on the forefront of the Cannabis 2.zero product classes, constantly innovating new merchandise and formulations.

Accelerates and strengthens Organigram’s presence in hashish 2.zero product classes and gives manufacturing and R&D diversification. EIC’s confectionary focus enhances Organigram’s industry-leading hashish infused chocolate manufacturing capabilities and permits Organigram to fabricate future confectionary product traces and undertake further R&D at a facility devoted for this goal. EIC has the potential to provide a variety of cannabis-infused merchandise in varied codecs and dosages together with pectin, gelatin, and sugar-free comfortable chews (gummies), toffee and caramel with novel capabilities corresponding to infusions, striping and risk of utilizing fruit purees.

Key Transaction Terms

The buy worth payable on closing of $22.zero million was happy in full by the issuance of 5,045,873 shares (the “Common Shares”) based mostly on the closing worth of Organigram of $4.36 per share on April 5, 2021. Upon satisfaction of the Milestones, Organigram will subject as much as an mixture of $13.zero million of Common Shares, for which the variety of Common Shares will probably be decided upon achievement of the Milestone. The Milestones embody:

  • $3.5 million to be paid in shares on first itemizing previous to December 31, 2021 in both the Ontario or Alberta leisure market of EIC or Organigram branded product (which was manufactured on the EIC facility);
  • $7.zero million to be paid in shares on the technology of $15 million in internet income through the 12 months ended December 31, 2022; and
  • $2.5 million to be paid in shares on the technology of $7 million in Adjusted EBITDA for the 12 months ended December 31, 2022.

Milestone funds paid in Common Shares shall be priced on the closing worth on the five-day VWAP for the shares on the TSX as of the day previous to settlement.

The transaction is structured as an acquisition of EIC’s shareholders, Quality Confections Canada Inc. and SUHM Investments Inc. The EIC Acquisition has acquired approval from the Toronto Stock Exchange. The distributors are arm’s size events to Organigram. The EIC Acquisition has been accepted by Organigram’s Board of Directors.

Advisors
Hyperion Capital Inc. acted as unique monetary advisor and Goodmans LLP acted as authorized advisor to Organigram.


About Organigram Holdings Inc.
Organigram Holdings Inc. is a NASDAQ Global Select and TSX listed firm whose wholly owned subsidiary, Organigram Inc., is a licensed producer of hashish and cannabis-derived merchandise in Canada.
Organigram is targeted on producing high-quality, indoor-grown hashish for sufferers and grownup leisure shoppers in Canada, in addition to creating worldwide enterprise partnerships to increase the Company’s international footprint. Organigram has additionally developed a portfolio of authorized grownup use leisure hashish manufacturers together with The Edison Cannabis Company, SHRED, Indi, Bag o’ Buds and Trailblazer. Organigram’s facility is situated in Moncton, New Brunswick and the Company is regulated by the Cannabis Act and the Cannabis Regulations (Canada). Organigram.ca

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