Why the Creso Pharma (ASX:CPH) share price is lifting today

Creso Pharma seems to be benefitting from announcements it made earlier in the week.

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Shares in medicinal cannabis company Creso Pharma Ltd (ASX: CPH) are inching higher today, now changing hands at 12 cents apiece.

Today’s 4.35% gain from the open builds on the past 2 days of trading. Over this time, the company has released a set of key announcements.

Here are the details.

What’s up with Creso Pharma shares today?

Creso shares are on the move despite there being no market-sensitive information from the company today.

However, the company seems to be benefitting from announcements it made earlier in the week.

Firstly, Creso announced that it entered into an asset purchase agreement with Canadian life sciences company, ImpACTIVE. The agreement is to purchase certain assets in ImpACTIVE’s portfolio.

The purchase is set to occur through a newly formed Creso subsidiary, known as Creso ImpACTIVE Ltd.

The transaction is a scrip deal for $217,000 worth of Creso shares, valued at 11 cents a share. That’s a smidge below its current share price.

One benefit Creso claims from the transaction is that it will expand the company’s footprint in North America. Concurrently, it will reduce cross-border regulation headwinds.

Separately, the medicinal cannabis player released a prospectus covering the issuance of “bonus options” to its shareholders yesterday.

Curiously, Creso states the purpose of this issue is to reward its shareholders. But it elaborates that the options can be considered a form of financing, if they are exercised.

That’s because, under the offer the prospectus describes, Creso will receive 25 cents for each bonus option that is exercised.

So in the event all of these newly issued options are exercised at some point in the future, Creso will receive a sum just shy of $100 million.

The prospectus also allows investors to trade the contracts on any ASX market that permits the buying and selling of derivatives.

It appears that these two price-sensitive updates may be still weighing in on the Creso Pharma share price today, particularly as the trading volume of its shares today is 72.5% of its 4-week average.

Creso Pharma share price snapshot

The Creso Pharma share price has struggled this year to date, having posted a loss of 35% since 1 January.

Despite this, it has soared almost 320% over the past 12 months, well ahead of the benchmark S&P/ASX 200 Indexs (ASX: XJO) climb of about 21% in the same time.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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