Organigram Holdings Inc. said Tuesday it has acquired The Edibles & Infusions Corp. for C$22 million in stock, plus up to an additional C$13 million in shares, in its first deal since receiving a C$221 million ($176 million) investment from British American Tobacco PLC.

The additional shares will be paid once the EIC business reaches certain earnout milestones, Moncton, New Brunswick-based Organigram OGI, -5.44% said in a statement.

Winnipeg, Manitoba-based EIC was co-founded by AgraFlora Organics International Inc. AGRA, and James Fletcher, chief executive of Cavalier Candies, one of Canada’s oldest confectionery businesses. The company operates out of a 51,000-square-foot manufacturing facility to produce cannabis edibles.

It currently has a license for research and processing and is in the midst of applying for a license to sell Cannabis 2.0 products, the name given to the second phase of Canada’s full legalization of the plant, when edibles and other non-flower products were allowed. The company is expecting to make its first sales of EIC soft chews in its fiscal fourth quarter.

“The integration of EIC will continue to provide our consumers access to innovative cannabis products while leveraging Organigram’s national sales and distribution network,” Organigram Chief Executive Greg Engel said in a statement.

Raymond James analyst Rahul Sarugaser said the deal will help consolidate Organigram’s already-strong position in the Canadian edibles market and add quality soft chew manufacturing expertise to its lineup of chocolate products.

“While the nascent Canadian edibles market makes up only about 4% of the adult-use market today, during the next few years we expect this regulation-constrained, COVID-hindered market to follow a trajectory similar to those observed in mature U.S. cannabis states, where edibles claim a greater than 10% market share, with soft chews and chocolates representing this category’s two most important product segments,” the analyst wrote in a note to clients.

Organigram said the deal will also diversify its manufacturing and R&D base, adding to those already destined for a Center of Excellence that it is building in collaboration with BAT BTI, -0.51% BATS, +1.66%.

Source:  https://www.marketwatch.com/story/organigrams-first-deal-since-securing-176-million-investment-from-bat-will-expand-cannabis-edibles-line-11617728456