Vertically integrated cannabis operator, Stem Holdings, Inc. (OTCQB:STMH, CSE:STEM) announced that executed a term sheet for a proposed business combination with Headwaters, LLC, a California-based greenhouse cultivator.
“Over the past 12 months, Stem has worked tirelessly to find the right company to transact a business combination with. We could not be more excited about combining forces with Headwaters, LLC,” said Matthew Cohen, CEO of Stem.
About The Transaction
Under Stem’s term sheet, the transaction will result in a reverse takeover of the company and, subject to the satisfaction of all listing conditions, the listing of the combined entity on the Canadian Securities Exchange and the OTCQB Venture.
According to a press release, following the closing of the transaction, it is expected that the former equity holders of HDWTR will own about 80% of the issued and outstanding Stem shares.
“Not only will this transaction bring world-renowned cultivation processes, but by combining with Stem and our existing footprint of brands and retail locations, we instantly become a pre-eminent vertically integrated and profitable cannabis company with a new platform and a vision to bolster even more accretive transactions in the future,” Cohen said.
Subject to the execution of a mutually agreeable definitive agreement, completion of due diligence, and subject to several conditions, the transaction is expected “to be completed by way of an amalgamation, merger or other forms of the business combination to be determined by the parties following receipt of securities, corporate and tax law advice,” per the release.
Headwaters has an emergent brand called Mr. Zips. The company’s founder is eager to keep expanding. “We’re ready to grow our business to the next level, and the Stem team enables us to do just that,” said Tristan Strauss, founder and CEO of Headwaters. “With access to capital markets and Stem’s valuable network, Headwaters is well-positioned to continue disrupting the world’s largest cannabis market and to expand into new territories.”
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