Organigram to acquire remainder of German co. Sanity

Executive Summary

• Organigram Global Inc. has entered into a definitive agreement to acquire all issued and outstanding shares of Sanity Group GmbH, a leading German cannabis company, not currently owned by Organigram.
• The transaction involves an upfront consideration of €113.4 million (approx. $183.7 million CAD), consisting of €80 million in cash and €33.4 million in Organigram shares, plus an earnout of up to €113.8 million based on financial performance.
• The acquisition is financed through a combination of cash on hand, a $65.2 million private placement investment from British American Tobacco (BAT), and a $60 million senior secured credit facility from ATB Financial.

Key Details

• Transaction Structure: Organigram will acquire 100% of Sanity Group GmbH.
• Upfront Consideration: €113.4 million total.
  • Cash: €80.0 million.
  • Share Consideration: €33.4 million in Organigram shares.
  • Share Price: Upfront shares priced at $3.00 per Organigram share (a 71% premium to the $1.75 TSX closing price on Feb. 17, 2026).
• Earnout Consideration: Up to €113.8 million.
  • Composition: Up to €20 million in cash and up to €93.8 million in Organigram shares.
  • Pricing: Earnout shares priced at the TSX 20-day VWAP on the trading day prior to settlement, subject to a $3.00 floor and $4.00 cap.
  • Calculation: Based on a notional Sanity valuation derived from 50% weight on Net Revenue (1.75x multiple) and 50% weight on EBITDA (12.5x multiple) for the 12-month period post-closing.
  • Cap: Notional Sanity valuation capped at €250 million.
  • Condition: Sanity must generate minimum EBITDA to be self-sustaining from a cash flow perspective. Organigram provides up to €10 million for working capital; unpaid amounts reduce the earnout.
• Financing:
  • Private Placement: BAT to invest $65.2 million.
    • $42.08 million from subscribing for 14,027,074 shares at $3.00/share.
    • $23.12 million from exercising top-up rights for 9,897,356 shares at $2.335854/share.
    • If BAT’s ownership exceeds 30%, excess shares issued as non-voting Class A convertible preferred shares.
  • Credit Facility: ATB Financial providing up to $60 million in senior secured facilities.
    • $40 million facility ($10M operating line + $30M revolving credit).
    • $20 million non-revolving credit facility.
• Sanity Group Financials & Operations:
  • Revenue Growth: €9 million (2023) → €19 million (2024) → €60 million (2025). Q4 2025 revenue was €19 million.
  • Gross Margin: 15% (2023) → 35% (2024) → 47% (2025).
  • Market Position: Estimated #2 market share in Germany as of Jan 2026 (up from #5 in Jan 2025).
  • EBITDA: Positive in 2025.
  • Operations: Based in Berlin; operates in Germany, Switzerland (2 pilot locations), Poland, UK, and Czechia.
• Strategic Rationale:
  • Expands Organigram’s footprint into Europe, specifically the German medical cannabis market (valued at >€2 billion in 2025, forecast to reach €4.5 billion by 2028).
  • Adds vertically integrated European hub, local leadership, and regulatory expertise.
  • Combines Organigram’s Canadian leadership with Sanity’s European presence.
• Closing Conditions & Timeline:
  • Expected to close concurrently with financing in Q2 2026.
  • Requires regulatory approvals (TSX, German Federal Ministry for Economic Affairs and Energy).
  • Requires shareholder approval (50.1% of disinterested shareholders) at a special meeting on March 30, 2026.
  • Constitutes a related party transaction under MI 61-101 due to BAT’s involvement.
• Advisors:
  • Organigram: EY (financial/tax), BMO Capital Markets (fairness opinion), Hogan Lovells (Germany legal), Goodmans (Canada legal).
  • Sanity Group: Rothschild (financial adviser), Max Narr (management), McMillan (Canada legal), RSR/Biagosch (Germany legal).
  • BAT: Stikeman Elliott (Canada legal).

Notable Quotes

• James Yamanaka, CEO of Organigram: "The proposed acquisition of Sanity Group marks a pivotal step in Organigram's global expansion strategy as a leader in the rapidly expanding cannabis industry... This transformational acquisition will bring together two market leaders, extend our commercial footprint into Europe and strengthen our competitive edge in the world's largest federally legal cannabis markets."
• Finn Age Hansel, CEO of Sanity Group: "I am truly excited to embark on this new chapter as our company joins forces with Organigram... Together, we are poised to unlock significant growth opportunities, especially as new European markets open to both medical and recreational cannabis programs."
• Paolo De Luca, Chief Strategy Officer, Organigram: "Organigram's proven track record in executing highly strategic and complementary M&A is exemplified by our proposed acquisition of Sanity Group -- a transaction that is both strategically significant and financially accretive."