Elixinol (ASX:EXL) has become the latest cannabis stock to get into the M&A game, acquiring German company CannaCare.

CannaCare is one of Germany’s leading CBD brands with 42 per cent market share in Germany’s drug stores and has a range of over 20 products (including CBD oils, sprays and cosmetic products) sold under the CANOBO brand.

CannaCare is owned by media entrepreneur Frank Otto who will be joining the Elixinol board.

Elixinol will pay €9 million up front ($13.9 million) and up to another €15 million ($23.1 million) if or when it reaches FY2021 revenues of €12.9 million ($19.9 million) and 20 per cent earnings.

Europe has been a hot space for CBD thanks to recent down-scheduling and Germany is Europe’s fastest growing CBD market – forecast to grow at 47 per cent CAGR until 2025.

CEO Oliver Horn said the deal leapfrogged Elixinol closer to its vision of being “a profitable, global, hemp derived consumer goods wellness business”.

The deal is subject to a shareholder vote, which will occur at its AGM in mid-May.


Elixinol the latest cannabis M&A participant

The ASX’s cannabis space had not seen much M&A activity but recent weeks have seen deals spring to life.

Last year Auscann (ASX:AC8) purchased Cannpal (ASX:CP1), and the deal was completed last week. Also this morning, Creso Pharma (ASX:CPH) announced it would be buying Canada-based Halucenex Life Sciences.

Elixinol (ASX:EXL) has had one of the more turbulent histories of ASX cannabis stocks.

The company once intended to be a cannabis grower, buying a 60-acre parcel in Northern NSW for $2.6 million in February 2019.

But 12 months later it was forced to hold a fire sale and is now focused on being a hemp-derived dietary supplements and skincare product seller.

The company has a distribution agreement with pharmaceutical chains Well Pharmacy in the UK and Boots in Ireland as well as a supply agreement with British doctor supplier Alliance Healthcare.

Elixinol declared that given its British presence, the acquisition would help create a pan-European business of scale that could help the European CBD market.

Shares in Elixinol and Creso Pharma both saw slight rises this morning but are substantially up in the past year.

Elixinol has grown from 15.4 cents to over 20 cents while Creso has grown from 3.5 cents to 21.5 cents in six months.

Elixinol (ASX:EXL) and Creso Pharma (ASX:CPH) share price chart


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