Cresco Labs (CRLBF 5.45%), a multi-state U.S. cannabis operator, announced on Wednesday that it closed on the acquisition of Origin House (ORHOF), a deal that was first proposed in April 2019. Origin House, previously known as CannaRoyalty, is a leading distributor of cannabis products in California and markets several of its own cannabis brands.
Terms of the deal
Originally, Cresco offered to give each Origin House shareholder 0.8428 Cresco Labs shares for each Origin House share owned. But after the prices of both Cresco and Origin House fell last year in the midst of a significant overall downturn for marijuana stocks, the original transaction terms were modified to reduce the number of Cresco Labs shares received by Origin House shareholders to 0.7031 Cresco shares for each Origin House share owned. In addition, Origin House agreed to complete a non-brokered financing to sell shares to raise around $30 million to strengthen its balance sheet.
Origin House shareholders voted on the revised terms on Dec. 31, 2019, with 99.66% of the votes in favor of the transaction. A final order from the Ontario Superior Court of Justice approving the acquisition was received on Jan. 6, 2020.
A pot powerhouse
Cresco Labs will now be an even bigger powerhouse in the U.S. cannabis industry. The company already had operations in six states with deals in progress to expand into three other states. The addition of Origin House should make Cresco a formidable player in the large California cannabis market.