Cresco Labs stock is in the green today after Cresco Labs (CSE:CL) (OTCQX:CRLBF) announced the expiration of a waiting period ahead of its acquisition of Origin House.
Cresco Labs Stock Trading Up on Billion-Dollar Deal
The cannabis sector has seen many acquisitions and mergers in recent months as larger companies make a grab to wholly own their supply chain and increase their production capacity without going to the effort of building an entirely new premise. Cresco Labs' proposed $1 billion USD takeover of Origin House will be one of the largest cannabis market acquisitions in the US since legal pot began arriving bit by bit to certain states. Cresco Labs stock is trading up at $6.21 following the expiration of the waiting period.
"The expiration of the HSR Act waiting period is a significant milestone for this transaction and for the entire cannabis industry," said Marc Lustig, Chairman and CEO of Origin House. The Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976, the legal provision which covers takeovers and mergers in the US, has frequently seen the Department of Justice hold up cannabis deals recently due to secondary information requests. Investors in Cresco Labs stock have clearly welcomed the smooth passage of the deal with optimism, as seen in today's trading.
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Aggressive Expansion Strategy
Cresco Labs has placed acquisitions and mergers at the forefront of its strategy for expansion, with the Origin House deal paving the way for the company to create a cannabis conglomerate. Earlier this year, Cresco acquired Florida’s VidaCann Ltd. for $120 million USD, which provided the company with access to two-thirds of the US legal market. Then in August, Cresco Labs stock gained 6% on news that the company was expanding into New York with an indirect takeover of Valley Agriceuticals.
While this aggressive expansion strategy may bear fruit down the line, investors are not meeting it with total positivity. Despite gaining in places, Cresco Labs stock is down over 50% from an April peak, a trend that continued following the $282.5 million USD acquisition of Tryke Companies. That deal, which does provide Cresco with access to one of the best storefront locations on the Las Vegas strip, was light on assets given the sizeable price tag. With earnings expected next month, investors will be eager to see the impact of these deals on the company's books.
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