Cannabis play MMJ embarks on a new journey; sells Phytotech for $8m
Health & Biotech
Health & Biotech
Cannabis play MMJ Phytotech is changing its name and direction — offloading its Phytotech Therapeutics business for $8 million to focus on building a portfolio of minority marijuana investments.
Medical cannabis producer Phytotech merged with MMJ in 2015 in a deal involving $15.5 million of Phytotech scrip and $5.1 million in performance shares.
The two companies had “complementary strategies and asset portfolios that would yield significant synergies” management said at the time.
MMJ Phytotech (ASX:MMJ) is heading in the opposite direction, offloading Phytotech to Canadian pot producer Harvest One (which it 30 per cent owns) for about $8 million and repositioning itself as a minority cannabis investor.
The soon-to-be renamed MMJ Group owns interests in eight cannabis-related companies, including a 3 per cent stake in pot-infused drinks business BevCanna and 12 per cent of Australian medical cannabis researcher Martha Jane Medical.
MMJ chief Jason Conroy told Stockhead the sale would benefit shareholders because it would free up capital and management time to pursue other investments, while still having a link to Phytotech through MMJ’s investment in Harvest One.
MMJ Phytotech (ASX:MMJ) past 12 months.Management told MMJ Phytotech shareholders on Monday the sale would also allow Phytotech to be integrated with Harvest One’s medical cannabis arm Satipharm, which would provide benefits which would not be achieved if the two businesses remained separate.
The deal is subject to shareholder approval and if it doesn’t get the votes, MMJ will continue to own 100 per cent of Phytotech.
If it does go ahead, the business will change its name to MMJ Group Holdings Ltd.
MMJ Phytotech shares fell 4 per cent on the day of the news, closing at an intraday low of 35c on Monday.