The Elixinol Global Ltd (ASX: EXL) share price has fallen 6.31% lower this morning after the Aussie cannabis group sold its Japanese operations yesterday.
What did Elixinol announce yesterday?
In an after-market update, Elixinol confirmed the sale of its 50.5% stake in Elixinol Japan to another major shareholder.
The Elixinol share price has plummeted in early trade, given the sale's net profit impact is an expected $2.2 million loss.
The Aussie cannabis group has sold its stake to Mr Takeshi Sakurada for consideration of JPY 1 million cash (A$13,500 on a converted basis).
The sale also includes a deferred cash payment of A$362,715 multiplied by a ratio of the 8 January 2020 closing price divided by $1.09 (less Japanese taxes).
There is also an obligation on Elixinol Global and Elixinol Japan to engage in good faith negotiations to enter into a licence agreement by 31 March 2020.
Terms of the deal include the following:
- Non-exclusive licence in Elixinol Global's tradeworks and know-how to allow Elixinol Japan to continue operating,
- Elixinol Japan to pay royalties equal to 3% of its gross sales, and
- an indefinite term, subject to mutual agreement on termination.
How has the Elixinol share price performed this year?
It's been a tough year for ASX cannabis stocks and the performance of the Elixinol share price reflects that.
The group's shares are down a whopping 64.31% since the start of January to just $0.96 per share. The Elixinol market cap has fallen to $133.07 million on the back of this year's slump.
However, Elixinol hasn't been the only cannabis stock to be hit hard by softening earnings and investor hesitation.