Organigram Holdings Inc. (NASDAQ and TSX: OGI), a licensed producer of cannabis, was up 2% in US premarket trade on Friday as it announced the acquisition of 100% of the issued and outstanding shares of Motif Labs Ltd., 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.

In addition, Motif shareholders will be entitled to receive additional contingent consideration of $10 million payable in Organigram common shares, 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.

According to Organigram, the combination results in #1 market share position in the Canadian recreational cannabis market and "catapults it" into the #1 position in the vape category, while accelerating the company's market share in the fast-growing infused pre-roll segment.

Organigram said it gains a "strategically" located distribution hub in Southwestern Ontario "enabling numerous logistics optimization opportunities" and it flagged "significant cost synergy potential" estimated to be in excess of $10 million, to be realized over about 24 months.

Organigram described it as a "financially accretive acquisition" with Motif generating approximately $86 million of LTM net revenue and adjusted EBITDA of $4.7 million

OGI closed Thursday on the TSX at $2.03.