The Motley Fool

Elixinol share price slumps 6% after sale of Japanese cannabis arm

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.

Creso Pharma Ltd (ASX: CPH) shares fell 30% on Monday to $0.14 per share while THC Global Group Ltd (ASX: THC) shares are down 21.28% this year.

The Cann Global Ltd (ASX: CGB) share price has nearly halved since the start of the year and opened at $0.016 per share this morning.

If ASX cannabis stocks aren't for you, check out these 3 ASX dividend stocks for more cash in your bank.

Top 3 Dividend Shares To Buy For 2020

When Edward Vesely -- our resident dividend expert -- has a stock tip, it can pay to listen. With huge winners like Dicker Data (up 147%) and Collins Food (up 105%) under his belt, Edward is building an enviable following amongst investors that are planning for retirement.

In a brand new report, Edward has just revealed what he believes are the 3 best dividend stocks for income-hungry investors to buy now. All 3 stocks are paying growing fully franked dividends giving you the opportunity to combine capital appreciation with attractive dividend yields.

Best of all, Edward’s “Top 3 Dividend Shares To Buy For 2020” report is totally free to all Motley Fool readers.

Click here now to access this free report.

Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!