Elixinol Wellness, a leading company in the hemp and cannabis wellness industry, has announced the acquisition of Ananda Food, a hemp food and animal products business, from Ecofibre Limited for $3 million. The deal includes a $2 million cash payment upon completion, expected in late March, and a $1 million earnout based on the sales growth of Ananda Food’s cat litter product until June 2025.
The acquisition will strengthen Elixinol Wellness’s position as one of the largest suppliers of hemp ingredients in Australia, across both branded and private-label products. It will also provide Elixinol Wellness with access to Ananda Food’s world-leading intellectual property database of hemp seed genetics, which is sold to domestic and international growers.
Ananda Food’s hemp products and genetics
Ananda Food is a producer of hemp food products, such as hemp flour, hemp protein, hemp seed, and hemp seed oil, as well as hemp animal products, such as hemp cat litter and hemp bedding. Ananda Food’s customers include major retailers, such as Woolworths and Coles, as well as online and specialty stores.
Ananda Food also has a strong reputation for its hemp seed genetics, which are adapted to various climates and regions. Ananda Food’s ECO-MS77 variety is widely considered to be the best fiber genetic in the US, based on its yield and ability to grow in all US latitudes. Ananda Food also supplies hemp seeds to growers in Australia, from Tasmania to North Queensland.
Ecofibre’s focus on core businesses
Ecofibre Limited, a medicinal cannabis and hemp company, decided to sell Ananda Food to Elixinol Wellness, as it deemed the division to be too small to deliver near-term cash profits. Ecofibre’s chairman, Barry Lambert, said that the sale was in line with Ecofibre’s strategy to focus on its core businesses, namely hemp black and Ananda Professional.
Hemp Black is a proprietary materials division that produces high-performance textiles and composites from hemp. Ananda Professional is a cannabidiol (CBD) oil division that distributes its products to pharmacies and health practitioners in the US.
Elixinol Wellness’s capital raise and share price
To fund the acquisition of Ananda Food, Elixinol Wellness launched a capital raise of $3.16 million, issuing new shares at a 50 percent discount to the last traded share price of 1 cent per share on February 9. The capital raise will result in a significant dilution for Elixinol Wellness’s shareholders, as the number of shares on its register will almost double.
Elixinol Wellness’s share price has plummeted from its peak of $4.58 in 2019 as the company faced regulatory challenges, legal disputes, and operational issues. The company reported a net loss of $18.8 million for the first half of 2023 and a net loss of $11.1 million for the third quarter of 2023.
Elixinol Wellness’s group CEO and managing director, Ron Dufficy, said that the acquisition of Ananda Food was a strategic move that would improve the company’s unit economics, asset utilization, and cost and revenue synergies. He also said that the acquisition would enhance the company’s product portfolio and innovation capabilities.