One of the big stories to emerge in recent days in the cannabis patch is the move to take out CannaRoyalty Corp (OTCMKTS:ORHOF) by Cresco Labs. Shares of ORHOF have been storming higher, nearing a test of the key psych $10/share level.
Specifically, the company just announced that it has entered into a definitive agreement pursuant to which Cresco Labs will acquire all of the issued and outstanding shares of Origin House. According to a release by Cresco, under the terms of the agreement, holders of common shares of Origin House will receive 0.8428 subordinate voting shares of Cresco Labs for each Origin House Share.
CannaRoyalty Corp (OTCMKTS:ORHOF) trumpets itself as a private equity firm specializing in acquisitions. The firm invests in the legal cannabis sector with a focus on research and intellectual property, consumer brands, and industry infrastructure. It seeks to invest in the United States and Canada. CannaRoyalty Corp. is headquartered in Ottawa, Canada.
The company is doing business as Origin House.
Origin House is a growing cannabis products and brands company operating across key markets in the U.S. and Canada, with a strategic focus on becoming a preeminent global house of cannabis brands.
The Company’s foundation is in California, the world’s largest regulated cannabis market, where it delivers over 130 branded cannabis products to the majority of licensed dispensaries.
Origin House’s brand development platform is operated out of five licensed facilities located across California, and provides distribution, manufacturing, cultivation and marketing services for its brand partners. The Company is actively developing infrastructure to support the proliferation of its brands internationally, initially through its acquisition of Canadian retailer 180 Smoke.
Origin House’s Common Shares currently trade on the Canadian Securities Exchange (CSE) under the symbol “CRZ” and will trade under the symbol “OH” effective October 23, 2018. Origin House is the registered business name of CannaRoyalty Corp.
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As noted above, ORHOF just announced that it has entered into a definitive agreement pursuant to which Cresco Labs will acquire all of the issued and outstanding shares of Origin House.
Traders will note 39% tacked on to share pricing for the company in the past month. In addition, the name has registered increased average transaction volume recently, with the past month seeing 97% above its longer-run average levels.
Marc Lustig, Chairman and CEO of Origin House commented, “From an Origin House perspective, this transaction is directly aligned with our strategy to build a leading portfolio of cannabis brands in California and to rapidly and accretively take those brands to the rest of the U.S. market, as well as the Canadian market. By partnering with one of the largest and most innovative U.S. multi-state operators in existence today, Origin House will supercharge its growth and be in a position to offer its brand partners access to 10 additional states, with licenses and supporting infrastructure already in place. Cresco shares Origin House’s resolute focus on the customer as the catalyst for all brand and business development efforts. This Transaction is not the first opportunity we have reviewed, but it has received the unanimous support of our board and large shareholders because we are confident that together we will be in a position to truly change the face of the global cannabis industry while continuing to create significant value for the shareholders of both companies.”
Now commanding a market cap of $611.37M, ORHOF has a significant war chest ($58.2M) of cash on the books, which stands against about $21M in total current liabilities. One should also note that debt has been growing over recent quarters. ORHOF is pulling in trailing 12-month revenues of $9.1M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 753.4%. We will update the story again soon as further details emerge. Sign-up for continuing coverage on shares of $ORHOF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $ORHOF, either long or short, and we have not been compensated for this article.