Cresco Labs Inc. (CNSX:CL) entered into a definitive agreement to acquire Origin House (CNSX:OH) for approximately CAD 970 million on April 1, 2019. Pursuant to the terms of transaction, Cresco Labs will acquire all issued and outstanding shares of Origin House and the holders of common shares of Origin House will receive 0.8428 subordinate voting shares of Cresco Labs for each share held, and each holder of a class A compressed share of Origin House ultimately receiving 84.28 subordinate voting shares of Cresco Labs. In case of fractional shares, cash payment of CAD 12.6 million will be paid. Pursuant to the amendment the consideration payment will be reduced from 0.8428 to 0.7031 of a subordinate voting share of Cresco Labs and the CLass A share will be reduced from 84.28 to 70.31 for each class A compressed share. Origin House option and warrants holders will also receive consideration amount at same exchange ratio. As a result of transaction, Origin House shareholders will hold approximately 20% stake in Cresco Labs Inc. In the event of termination, Origin House will pay an amount of CAD 45 million. On November 25, 2019, Origin House closed its non-brokered financing. In connection with the Financing, Origin House issued approximately 9.8 million common shares of Origin House at a price of CAD 4.08 per Common Share for aggregate net proceeds of approximately CAD 39.6 million. The financing was fully subscribed, and substantially all of the proceeds are being held in escrow pending closing of announced plan of arrangement transaction pursuant to which Cresco Labs Inc. will acquire all of the issued and outstanding shares of Origin House in an all-stock transaction, as amended on November 12, 2019.


On June 6, 2019, Origin House agreed with Cresco to certain technical amendments to its previously announced plan of arrangement. The amendments permit outstanding restricted share units to remain outstanding following the completion of the arrangement as opposed to automatically converting such RSUs into Subordinated Voting Shares of Cresco, as previously provided in the Plan of Arrangement. The amendments were agreed to as they provide additional flexibility to holders of the RSUs without effect to the treatment of Origin House's shareholders under the arrangement. Upon completion of transaction, Marc Lustig, Chairman and Chief Executive Officer of Origin House will be appointed to the executive management team of Cresco Labs and will also serve as a member of the Company's Board of Directors. As of October 3, 2019, Afzal Hasan, President and General Counsel of Origin House, will be leaving effective immediately. His departure was mutually planned to coincide with Origin House's current phase of development and in anticipation of the close of the acquisition of Origin House by Cresco Labs.

The transaction is subject to CSE, interim and final order of Ontario court and certain other regulatory approvals, receipt of required authorizations under the HSR Act, approvals required under the Company Licenses in the State of California, third party approvals, Dissent Rights have not been exercised with respect to more than 5% of the issued and outstanding Origin's shares, Marc Lustig shall have entered into an employment agreement in form and substance satisfactory to Cresco Labs, Marc Lustig shall have been appointed to the Board of Directors of Cresco Labs and approval of two-thirds of the shareholders of Origin House at a special meeting expected to be held on June 11, 2019, among others. Approval of Cresco Labs Shareholders is not required. As of November 13, 2019. Origin House expects to hold a second meeting of its shareholders to approve the arrangement, as amended, and it is expected that the Meeting will be held in late December, 2019. As of December 2, 2019, the arrangement is subject to, among other things, the approval of holders of common shares at a special meeting of holders of Common Shares scheduled to be held on December 31, 2019. Certain Origin House Directors, officers and other significant shareholders have entered into irrevocable voting and support agreements to vote in favor of the transaction, and have also agreed for their resulting Cresco Labs shares to be deposited into escrow and released over a period of nine months following closing of the transaction.

The transaction has been unanimously approved by the Board of Directors of each of Cresco Labs and Origin House. The Board of Directors of Origin House unanimously recommends that Origin House shareholders to vote in favor of the transaction. As of May 3, 2019, the transaction has received an interim order from the Ontario Superior Court of Justice. The final order from the court is expected on or about June 13, 2019. 10.1% common shareholders of Origin House and 100% compressed shareholders have entered into support agreement for the transaction. As of June 5, 2019, the transaction has received favorable support, with 99.54% of the votes cast being in favor of the Arrangement. The deadline for the shareholders vote is on June 7, 2019. The holders of common shares of Origin House and the holders Origin House compressed shares approved the deal on June 11, 2019. As of December 13, 2019, Origin House announced that, based on the votes cast to date, the Company has received overwhelming support in respect of the statutory plan of arrangement. As of close of markets on December 12, 2019, the trading day prior to the dissemination of this press release, of the votes cast, 99.23% are in favour of the Arrangement. The Board of Directors of Origin House encourages shareholders to vote in favor of the Arrangement, before the deadline of Friday, December 27, 2019.

As on June 13, 2019, Origin House has obtained a final order from the Ontario Superior Court of Justice (Commercial List) approving the plan of arrangement. Receipt of the final order will allow Origin House to complete the Arrangement upon satisfaction of the remaining closing conditions, including the receipt of required regulatory approvals. As of September 17, 2019, the HSR Act waiting period was extended by the issuance of the Second Requests to Cresco Labs and Origin House. That extended waiting period terminates 30 days. That waiting period is expected to expire on or around October 17, 2019. On October 16, 2019, Federal Trade Commission has given the antitrust approval following the expiration of the waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act. As of December 31, 2019, shareholders of Origin House has approved the transaction. The transaction is expected to be completed by the end of June 2019, subject to the satisfaction or waiver of applicable closing conditions. As of April 29, 2019, the transaction is expected to close sometime in mid-June 2019. As of May 6, 2019, the transaction is expected to close in June 2019 end. As of August 21, 2019, the transaction is expected to close during the fourth quarter of 2019. As of November 13, 2019, the transaction is expected to close in the middle of January 2020. Cresco Labs views the transaction to be accretive.

Canaccord Genuity Corp. acted as financial advisor while Aaron E. Sonshine, Kristopher R. Hanc, Jeffrey Kerbel, Christopher A. Travascio, Elad Travis, Bronwynn Shaw, Nicholas Nevins, Matthew Peters, Alan P. Gardner and Joseph N. Blinick of Bennett Jones LLP acted as legal advisors for Cresco Labs Inc. Cormark Securities Inc. acted as financial advisor and fairness opinion provider while Norton Rose Fulbright Canada LLP acted as legal advisor for Origin House. Kingsdale Advisors acted as strategic shareholder and communications advisor for Origin House. Odyssey Trust Company acted as the depository to Cresco Labs. Kingsdale Advisors acted as proxy solicitor to Origin House for a fee of CAD 0.15 million.

Cresco Labs Inc. (CNSX:CL) completed the acquisition of Origin House (CNSX:OH) on January 8, 2020. Pursuant to the arrangement, Cresco Labs will appoint Marc Lustig, Chairman and Chief Executive Officer of Origin House, to the Cresco Board of Directors, following receipt of certain U.S. regulatory approvals. It is anticipated that the Origin House Common Shares will be delisted from the Canadian Securities Exchange as of the close of trading on January 9, 2020.