This pot stock buyout deal marks the single biggest acquisition of an American cannabis company.
Legal cannabis is America’s No. 1 growth market. And big players are rushing to secure the top positions.
The cannabis boom is encouraging more “pot stock” IPOs. Plus, tech companies including Pinterest and Uber are preparing to go public.
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Cresco Labs (OTC: CRLBF) – a cannabis company based in Chicago – will acquire Origin House (OTC: ORHOF) in an all-stock transaction.
Under the terms of the pot stock buyout, shareholders of Origin House will receive Cresco Labs stock valued at $12.68.
That’s a 26% premium to the average price of Origin House over the last 30 days.
The deal is valued at $1.1 billion Canadian.
Origin House is a Canadian company with cannabis operations in the U.S. The company has focused on the California market.
With over 50 cannabis brands distributed in +500 dispensaries, the company is a major player. Its products are available in 60% of the dispensaries in California.
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Shares of Origin House actually fell on the news – with shares closing yesterday at $11.65.
As a shareholder, I’m disappointed by this deal. That’s because the purchase price isn’t a much of a premium to the recent share price.
You can see that shares have rallied in recent weeks. And that means there’s essentially no acquisition premium.
In fact, the deal is just 5.2% above Friday’s closing price.
Right now, Origin House shares trade below the proposed buyout price. And this suggests one of two things.
First, it suggests that shares of Cresco Labs are overvalued . . . and that Origin House shareholders think Cresco shares will fall – reducing the value of the deal.
Second, it suggests that the deal is unlikely to get closed. The deal requires a two-thirds approval from Origin shareholders.
Without a huge premium to the recent share price, Origin shareholders could vote against the deal.
The shareholders vote on the pot stock buyout in June. And I’ll keep you up to speed between now and then.
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