- Elixinol Global (EXL) has lost a sales agreement to sell Hemp Foods Australia to Chinese company Yunnan Luxin Biopharmaceutical Co
- The Shanghai Shunho subsidiary was going to buy the business for $500,000, through a share purchase agreement
- Shunho terminated the agreement today due to non-satisfaction of a condition on the deal, due to COVID-19 impacts
- Therefore, Elixinol will continue to operate it Hemp Foods Australia (HFA) business
- At market close, Elixinol is up 9.09 per cent and is selling shares for 24 cents each
Elixinol Global (EXL) has had its Hemp Foods Australia (HFA) sale agreement with Yunnan Luxin Biopharmaceutical shredded today.
The Chinese company, which is a subsidiary of Shanghai Shunho New Materials Technology, was going to buy Hemp Foods for $500,000 in a share purchase agreement (SPA).
However, Shunho terminated the deal due to non-satisfaction of a condition on the SPA. Impacts from the COVID-19 pandemic were cited as the reason for the non-satisfaction. Therefore, Elixinol will continue to operate Hemp Foods Australia.
Elixinol CEO Oliver Horn said the sale of the business was in line with its strategy to focus on a hemp-derived cannabidiol market.
"In light of the termination of the SPA, we will continue to run the HFA business pending an evaluation of all potential opportunities available with the business," he said.
"HFA is well-positioned to service consumers growing needs for more environmentally friendly, clean and plant-based foods that are high in nutritional value," he added.
According to Elixinol, Hemp Foods Australia is the largest certified organic hemp food retailer in the Southern Hemisphere. Its product range includes hemp seed, hemp oil and hemp flour product.
The company also manufactures hemp-based Sativa skincare range, as well as a Hemp Snack Bars range.
During the first quarter of the 2020 financial year, Hemp Foods Australia generated $1.3 million in revenue but reported an earnings before interest, taxes, depreciation, and amortisation (EBITDA) loss of $200,000.
"The Essential Hemp and Grounded food brands under HFA enjoy strong
brand recognition and are in wide distribution across grocery, specialist retail and online," Oliver said.
"HFA’s hemp-based and cruelty-free Sativa skincare range also offers opportunities to meet consumers growing need for more natural personal care products," he added.
At market close, Elixinol is up 9.09 per cent and is selling shares for 24 cents each.