TIDMBATS
RNS Number : 9666R
British American Tobacco PLC
11 March 2021
BAT enters strategic R&D collaboration to accelerate
'beyond nicotine' strategy with Organigram
-- BAT subsidiary acquires 19.9% equity investment in
Organigram, a leading Canadian cannabis licensed producer
-- Product Development Collaboration Agreement leverages
combined expertise in plant-based science and product
development
-- Complements strong momentum in New Category Brands and
supports delivery of BAT's purpose of building A Better
Tomorrow(TM)
LONDON - 11 March 2021: BAT Group (BAT) today announces the
signing of a strategic collaboration agreement with Organigram
Inc., a wholly-owned subsidiary of publicly-traded Organigram
Holdings Inc. (collectively Organigram), focused on research and
product development activities of next generation adult cannabis
products, with an initial focus on cannabidiol (CBD).
This agreement augments ongoing BAT activities to expand its
portfolio 'beyond nicotine' and follows the pilot launch of Vuse
CBD Zone in Manchester, UK earlier this year. The collaboration
reinforces BAT's consumer-centric multi-category approach, which
has seen continued momentum and growth as BAT focuses on delivering
on its purpose of building A Better Tomorrow(TM).
Through the collaboration, BAT will gain access to cutting-edge
R&D technologies, product innovation and cannabis expertise,
complementing BAT's extensive plant-based expertise and development
capabilities.
Organigram has a proven track record of consumer-led innovation
and developing high quality adult-use recreational and medical
cannabis products, which are legally available in Canada. By
leveraging Organigram's first-hand experience, BAT will deepen its
understanding of this rapidly expanding and evolving area.
Dr David O'Reilly, Director Scientific Research at BAT,
comments: "Today's announcement underscores our commitment to
accelerating our transformation and building A Better Tomorrow. Our
multi-category, consumer-centric approach, which is key to our
transformation, aims to provide choice and meet the evolving needs
of adult consumers. This choice provides reduced risk alternatives*
to combustible cigarettes, as well as going beyond tobacco and
nicotine into new and exciting areas of product innovation.
"We believe this collaboration has significant potential to
enhance our activities, allowing us to combine our world-class
expertise while enabling scientists from both BAT and Organigram to
work closely together and share information real-time. We know that
in R&D this is how you make real breakthroughs and accelerate
progress.
"We have been impressed by the strong management team and
culture at Organigram. This collaboration aligns with our long-term
strategy, and will enable us to work with Organigram at an R&D
level, as well contributing to their wider operations."
Greg Engel, Chief Executive Officer of Organigram, comments:
"This is a tremendous milestone in the evolution of Organigram. It
is instrumental in advancing our commitment to offering consumers
innovative cannabis products and to furthering our long-term
international strategy. We have been extremely selective about
aligning with a strategic partner and, in BAT, we've found a
leading consumer goods business with innovative product platforms,
an impressive dedication to research and development, deep consumer
insights, regulatory expertise and a commitment to responsible
stewardship and consumer safety."
Deal terms
To operationalise the 'Product Development Collaboration
Agreement' (PDC) a "Centre of Excellence" will be established to
focus on developing the next generation of cannabis products with
an initial focus on CBD. The Centre of Excellence will be located
at Organigram's indoor facility in New Brunswick, Canada, which
holds the Health Canada licenses required to conduct R&D
activities with cannabis products. Both BAT and Organigram will
contribute scientists, researchers, and product developers to the
Centre of Excellence which will be governed and supervised by a
steering committee consisting of an equal number of senior members
from each of BAT and Organigram. Both partners share a commitment
to continue to maintain the highest regulatory and ethical
standards.
As part of the transaction, BAT and Organigram will grant each
other a licence to certain intellectual property to enable the
development of new and potentially disruptive, novel products. Both
parties will have the ability to independently commercialise any
products developed as a result of the collaboration under their own
brands.
Under the terms of the transaction, a BAT subsidiary will
acquire a 19.9% equity stake in Organigram Holdings Inc. (listed on
both the Nasdaq and Toronto Stock Exchange under the symbol "OGI")
to become the largest shareholder, with the ability to appoint two
directors to Organigram Holdings Inc.'s board of directors and
representation on its investment committee. At closing, one BAT
nominee, Mr. Jeyan Heper, was added to the board and another
nominee is expected to be added in the near term.
The investment, valued at approximately GBP126 million, was
priced at C$3.79 per share which was based on the five-day volume
weighted average price of Organigram Holdings Inc.'s shares on the
Toronto Stock Exchange ending March 9, 2021 and represents a
discount to the closing price of C$3.94 on March 9, 2021. These
funds will provide a significant injection of capital for
Organigram that will enable them to expand and accelerate their
R&D and product development activities, and support business
expansion.
S
NOTES TO EDITORS
BAT has considered its obligations under applicable laws and
regulations in undertaking this Transaction and has taken
appropriate measures to ensure compliance with such laws.
About BAT
BAT is a leading, multi-category consumer goods business,
established in 1902. Our purpose is to build A Better Tomorrow(TM)
by reducing the health impact of our business which entails:
-- Committing to providing adult consumers with a wide range of
enjoyable and less risky products
-- Continuing to be clear that combustible cigarettes pose
serious health risks, and the only way to avoid these risks is not
to start or to quit
-- Encouraging those who otherwise continue to smoke, to switch
completely to scientifically-substantiated, reduced-risk
alternatives*
-- Tracking and sharing progress of our transformation
The company has announced a target of increasing the number of
its non-combustible product consumers to 50 million by 2030; and to
achieve at least GBP5 billion in New Categories revenues in
2025.
* Based on the weight of evidence and assuming a complete switch
from cigarette smoking. These products are not risk free and are
addictive.
About Organigram Holdings Inc.
Organigram Holdings Inc. is a NASDAQ Global Select and TSX
listed company whose wholly owned subsidiary, Organigram Inc., is a
licensed producer of cannabis and cannabis-derived products in
Canada.
Organigram is focused on producing high-quality, indoor-grown
cannabis for patients and adult recreational consumers in Canada,
as well as developing international business partnerships to extend
the Company's global footprint. Organigram has also developed a
portfolio of legal adult use recreational cannabis brands including
The Edison Cannabis Company, SHRED and Trailblazer. Organigram's
facility is located in Moncton, New Brunswick and the Company is
regulated by the Cannabis Act and the Cannabis Regulations
(Canada).
Enquiries
Press Office
+44 (0) 20 7845 2888 (24 hours) | @BATplc
Investor Relations
Mike Nightingale: +44 (0)20 7845 1180
Victoria Buxton: +44 (0)20 7845 2012
William Houston: +44 (0)20 7845 1138
John Harney: +44 (0)20 7845 1263
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