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Cannabis Summary for Jan. 8, 2020

2020-01-08 21:27 ET - Market Summary

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by Stockwatch Business Reporter

The Canadian Securities Exchange Composite Index gained 5.00 points to 394.74 Wednesday. Illinois-based Cresco Labs Inc. (CL) gained three cents to $7.80 on 944,400 shares after announcing that its pending acquisition of CannaRoyalty Corp. (OH: $5.43, doing business as Origin House) finally closed. Origin House is a cannabis brand development and distribution company in California. With the acquisition, Cresco will sell into over 575 dispensaries in California, about 65 per cent of the state's legal cannabis stores. Additionally, Origin House has a 92,000-square-foot indoor growing operation in California that Cresco will use to grow and process cannabis products to sell in that state.

The agreement, signed on April 1, 2019, initially valued the acquisition at $1.1-billion. Under the agreement, each Origin House shareholder was to receive 0.8428 of a Cresco share for each Origin share. In November, the companies agreed to cut the share exchange back so that Origin holders would receive 0.7031 of a Cresco share for each Origin share held, effectively decreasing the price of the acquisition. In all, Cresco issued 66.48 million shares to Origin House shareholders (compared with the then-current 71.27 million shares outstanding).

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