- Elixinol Wellness (EXL) is not going ahead with its acquisition of CannaCare Health citing intensified competition in the German cannabidiol market
- The companies entered a binding agreement in March which was due to be settled on July 5
- Elixinol Chief Executive Officer Oliver Horn says the additional investment required to achieve profitable growth exceeds the company’s risk appetite
- The company will not be required to pay the initial €3 million (A$4.7 million) cash consideration acquisition
- Elixinol Wellness shares are down 11.5 per cent and trading at 11.5 cents
Elixinol Wellness (EXL) will not go ahead with its acquisition of CannaCare Health citing intensified competition in the German cannabidiol market.
Elixinol announced it had entered a binding agreement to acquire the German company through its subsidiary on March 15, in a bid to capitalise on a growing European CBD market.
The acquisition was set to be finalised on July 5 2021 however EXL backed out of the deal after identifying “a changed German market outlook with rapidly intensifying competition”.
Elixinol Chief Executive Officer Oliver Horn commented on the withdrawal.
“CannaCare is a leading brand in the German retail market with a strong distribution footprint and is well-positioned for growth,” he said.
“However, over the recent months the German market has become increasingly competitive, and the additional investment required to achieve profitable growth exceeds our current risk appetite.”
CannaCare shareholders are set to cover a portion of Elixinol Wellness’ costs incurred to date stemming from the proposed acquisition.
Further, Elixinol will not be required to pay the initial €3 million (A$4.7 million) cash consideration for the proposed acquisition and CannaCare’s major shareholder Frank Otto will not join the EXL board.
Elixinol Wellness shares were down 11.5 per cent to trade at 11.5 cents at 12:56 pm AEST.