A vote of confidence from a large portion of its shareholders put a spring in the stock price of a local cannabis holding firm on Monday as prospective buyers knock at the company’s door.
Origin House (CSE:OH), which launched in Ottawa as CannaRoyalty back in 2017, announced Monday that stakeholders owning more than a quarter of the company’s common shares had entered into voluntary voting support agreements, signalling their confidence in the firm’s business plan.
The move comes as Origin House says it’s received numerous stock-based offers from other publicly traded cannabis companies in recent months – all of which low-ball the long-term value of the firm, according to its leadership.
The support agreements were prepared in hopes of fending off any potential hostile takeover attempts, which CEO Marc Lustig cites as a worrying trend in the cannabis market. Canadian pot producers CanniMed Therapeutics and Aphria are among those facing stock-based takeover bids in recent months.
“We are seeking to protect the company from opportunistic paper bids designed on taking advantage of shareholders by offering short-term gain while depriving them of the more significant potential long-term value that we are building,” Lustig said in a statement.
In short, the agreements state that shareholders will support the board of directors’ decision-making and will not entertain takeover bids that are not endorsed by the board.
Lustig – the largest individual shareholder of the firm – is among the signatories of support agreements, as are Origin House president Afzal Hasan and shareholders from the company’s subsidiaries. The Ottawa-based cannabis firm’s business model revolves around acquiring producers, distributors and retail players in the emerging pot market, especially focused in California.
Lustig clarified that the support agreements are only meant to fend off coercive bids to acquire the firm, and that the company would still consider acquisition offers that, in management’s estimate, provide a fair value for shareholders.
Shares of Origin House jumped up as much as 12 per cent in trading on the Canadian Securities Exchange Monday. Shares sat at $7.65, up nearly 11 per cent on the day, at the time of publishing.