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by Stockwatch Business Reporter
The S&P/TSX Cannabis Index lost 6.96 to 238.37, while the CSE Composite Index lost 5.89 to 881.40. Canadian cannabis grower Organigram Holdings Inc. (OGI) lost 22 cents to $4.14 on 5.96 million shares. It announced today that it has acquired The Edibles & Infusions Corp. (EIC) for up to $35-million from EIC's owners, which include Agraflora Organics International Inc. (AGRA), unchanged at four cents on 23.3 million shares. The price tag comprises $22-million upfront and a further $13-million in potential milestone payments.
Organigram's investors seemed put off by the acquisition. This may partly reflect the fact that Organigram is financing the whole deal with shares (specifically, 5.04 million shares at $4.36 to cover the initial $22-million, with the future milestone payments to be tied to market prices). This is a surprising bit of dilution considering that Organigram is flush with cash. It received a $221-million investment from BAT (British American Tobacco) just last month. As of April 1, its stated cash balance was $235-million. Why it diluted shareholders rather than tapping some of this cash was not explained, but perhaps EIC's owners preferred to receive shares. Agraflora, for its part, said it views the deal as "truly mutually beneficial."
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