Organigram Holdings Inc’s U.S.-listed shares OGI, -6.47% soared 47% in premarket trade Thursday, after the Canadian cannabis company said it has received a C$221 million ($176.6 million) investment from a unit of British American Tobacco PLC BATS, -0.42% BTI, +1.14%. The tobacco company has subscribed for about 58.3 million shares of Organigram, equal to a 19.9% stake at a price per share of C$3.792, based on a five-day volume weighted average price on the TSX ending March 9, 2021. Organigram shares closed Wednesday at $2.89. As part of the deal, the companies have entered a product development collaboration agreement, and will create a Center of Excellence to work together to develop the next generation of cannabis products, focused initially on CBD. “Both companies will contribute scientists, researchers, and product developers to the Center of Excellence which will be governed and supervised by a steering committee,” the two companies said in a statement. They will each have access to each other’s intellectual property. BAT will have the right to appoint 20% of the Organigram board, as long as it maintains at least 15% of its outstanding shares. Organigram is expecting the deal to help it expand overseas including into the U.S. market. Organigram shares have gained 68% in the last 12 months, while the Cannabis ETF THCX, -2.46% has gained 151% and the S&P 500 SPX, +0.60% has gained 42%.
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