Organigram Holdings Inc., OGI, has made a significant acquisition by purchasing 100% of Motif Labs Ltd. for CA$90 million, with CA$50 million in cash and CA$40 million in Organigram common shares. Additionally, there is a possibility of an extra CA$10 million contingent consideration to be paid in shares, subject to meeting certain conditions within a specific timeframe. This deal, financed through Organigram's cash reserves, marks the company's strategic move to solidify its position as Canada's largest cannabis company by market share, standing at 12.4% and positioning itself among the top players in the vape and infused pre-roll categories.
The acquisition of Motif Labs not only enhances Organigram's market presence within Canada but also sets the stage for global expansion as cannabis regulations evolve worldwide. The integration of Motif's innovative approach and successful track record, evident with their increased net revenue from $35 million in 2022 to $79 million in 2023, brings significant value to Organigram. This move is not just about acquiring market share but also about unlocking synergies and driving financial performance, with estimated cost savings of $10 million over two years. Furthermore, Motif's advanced extraction and manufacturing capabilities in Aylmer and London will bolster Organigram's production capacity and serve as a strategic distribution hub, strengthening its foothold in the cannabis industry.
Organigram's CEO, Beena Goldenberg, emphasized the importance of this acquisition in propelling the company to become a leader in various cannabis categories, fueled by a consumer-centric approach and a commitment to innovation. With shares trading higher post-announcement, it is evident that investors are optimistic about the potential growth and synergies that this acquisition brings to Organigram. The strategic alignment of two prominent players in the Canadian cannabis market, as highlighted by Paolo De Luca, the company's chief strategy officer, signifies a collaborative effort to capitalize on each other's strengths and drive further growth both domestically and internationally.