Organigram's Acquisition of Motif: A New Cannabis Powerhouse

Organigram Acquires Motif, Becoming Canada’s Largest Cannabis Company by Market Share

December 06, 2024

Transformational Acquisition Results in Cannabis Pure Play Leader, Coast-to-Coast Geographic Strength and Proven Excellence in Consumer-Focused Innovation, Cultivation, Product Development, Extraction and Manufacturing

• Combination results in #1 market share position in the Canadian recreational cannabis market¹
• Catapults Organigram into the #1 position in the vape category and accelerates the Company’s market share in the fast-growing infused pre-roll segment 1
• Strong brand portfolio now anchored by Organigram’s “SHRED” and Motif’s “BOXHOT” – two of Canada’s beloved cannabis brands
• Highly complementary product portfolios with expanded geographic reach
• Organigram gains strategically located distribution hub in Southwestern Ontario enabling numerous logistics optimization opportunities
• Significant cost synergy potential estimated to be in excess of $10 million to be realized over ~24 months
• Financially accretive acquisition with Motif generating approximately $86 million of LTM net revenue and adjusted EBITDA of $4.7 million 2,3

TORONTO–(BUSINESS WIRE)– Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI), (the “Company” or “Organigram”), a leading licensed producer of cannabis, is pleased to announce the acquisition of 100% of the issued and outstanding shares of Motif Labs Ltd. (“Motif”), for upfront consideration of $90 million, consisting of $50 million in cash and $40 million of Organigram common shares priced based on the 30 day trading VWAP of $2.3210 on the Toronto Stock Exchange (“TSX”). In addition, Motif shareholders will be entitled to receive additional contingent consideration of $10 million payable in Organigram common shares (“Contingent Consideration”), conditional on Organigram achieving a price per share exceeding $3.2203 per share, based on the rolling 30-trading day VWAP on the TSX, within 12 months of the date of the transaction. The Contingent Consideration shall be priced at of $3.22031 per share.

The highly complementary acquisition of Motif establishes Organigram as Canada’s largest cannabis company by market share and accelerates our vision to be a leading cannabis company across all major categories, driven by a relentless focus on the consumer of today and tomorrow.

Winning in Canada, the world’s largest federally legal recreational market, supported by leading brands and best-in-class operations, innovation and product development, provides the platform to unlock global opportunities as evolving attitudes towards cannabis drive regulatory changes in new and exciting markets.

Motif is a Canadian leader in the vape and infused pre-roll (“IPR”) categories backed by a portfolio of strong, owned brands, including the popular BOXHOT brand. Motif’s business also includes a wholesale division and end-to-end services for external brands. Motif has repeatedly proven to be able to design, develop and launch, innovative and high-quality products at speed and scale, resulting in market growth with SKUs and brands that resonate with consumers. Motif is headquartered in Aylmer, Ontario, strategically located in the heart of Southwestern Ontario soon-to-be supported by a large distribution warehouse in nearby London, Ontario.

“Motif was founded in 2017 with a vision to leverage manufacturing expertise to succeed in the production of cannabis extracts. We are proud to say that today, not only is Motif one of Canada’s largest and most efficient extractors but we have also commercialized a portfolio of leading, widely distributed brands that have unlocked leading market share positions of #1 in vapes and #3 in infused pre-rolls,” said Mario Naric, CEO and Founder of Motif. “This is a landmark transaction in our industry and the Motif team is thrilled to be joining forces with Organigram to create Canada’s undisputed leader with deep capabilities in all major cannabis categories.”

Motif Highlights

• Grew from $35 million in net revenue in 2022 to $79 million in 2023 and has generated approximately $86 million in LTM 4
• Delivered 15 consecutive quarters of positive adjusted EBITDA 5
• Maintained a #1 vape position for over two years, with a current market share of 21.2% 6 supported by the strength of the BOXHOT and DEBUNK brands, backstopped by vape manufacturing capabilities of over 1 million units a month
• Currently the #3 position and growing in IPRs 6 and growing market share supported by monthly IPR manufacturing capabilities of over 750k units per month
• Deep expertise and proven efficiency at various extraction methodologies such as hydrocarbon, ethanol, and CO 2
• Capable of producing 1,350 kg of distillate per month and 400 kg of hydrocarbon derived extracts
• Extraction breadth of expertise and efficiencies support various ready-to-consume categories that require traditional inputs such as THC and CBD but also more innovative and novel products that use minor cannabinoids such as CBN, CBG and CBC
• Production of THCA, a highly sought input to the production of the fast-growing IPR market, is also a key core capability of Motif

Strategic Rationale

Organigram has a proven track record of executing on Canadian M&A, successfully capturing and growing market share with highly complementary acquisitions that add to our existing strengths. This acquisition of Motif is no exception. This deal is about a leading public cannabis company joining forces with Canada’s top private licensed producer. We are extremely excited about leveraging our combined competitive advantages and respective market positions to continue to grow in Canada and beyond.