Ecofibre Limited, owner of hemp food and animal products business Ananda Food, has advised it will sell the business to Elixinol Wellness, which halted trading today (12 February), announcing a capital raise of $3.16 million to fund the acquisition.
Ananda Food is one of Australia’s largest hemp producers, producing hemp ingredients and products for bulk, branded and private label customers.
In Australia, Elixinol Wellness produces, manufactures, and distributes products across human nutrition, human wellness, pet wellness and superfood ingredients under brands including Hemp Foods Australia, Mt Elephant and Field Day. It recently provided a safety update on its hemp extract product, made with cannabidiol (CBD) isolate, and copaiba.
Elixinol Wellness CEO and MD Ron Dufficy said the acquisition would see Elixinol become one of the largest suppliers of hemp ingredients in Australia.
“The acquisition of Ananda Food will broaden Elixinol’s hemp ingredients portfolio, and will bring improved unit economics through increased production yields and asset utilisation and create opportunities for significant cost and revenue synergies,” said Dufficy.
In its ASX announcement, Ecofibre said the funds from the sale would be used to provide additional working capital for the group as it continues to refine its focus on core businesses and reduce debt.
Ecofibre chairman Vanessa Wallace said Ananda Food was currently too small to deliver near term cash profits from its hemp food and pet products business.
“This sale will deliver a good outcome for Ecofibre’s shareholders and enable a sustainable future for the combined business,” said Wallace.
The sale is expected to be completed by the end of March. The agreement provides for the sale of Ecofibre’s shareholding in Ananda Food Pty Ltd to Elixinol for $3.0m, in $2 million cash payable on completion, expected to occur in late March 2024, and $1 million earnout, subject to the value of cat litter product sales between 1 April 2024 and 30 June 2025.