Look out for the Auscann (ASX:AC8) and Cannpal (ASX:CP1) share prices post trading halt

Auscann Group Holdings and Cannpal Animal Therapeutics should emerge from their trading halt tomorrow. Here's why to watch…

| More on:
A man with binoculars crouched in the bush, indication a share price on watch

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Auscann Group Holdings Ltd (ASX: AC8) and Cannpal Animal Therapeutics Ltd (ASX: CP1) share prices will be on watch tomorrow. (Assuming, of course, that the ASX system has returned to functionality by then!)

Both companies entered a trading halt on Friday, prior to revealing that Auscann has entered into a scheme implementation deed (SID) with Cannpal.

Neither company escaped the ravages of the COVID-19 market rout in February and March. But Cannpal came roaring back, with shares up 8.3% year-to-date. Auscann shareholders have had a more difficult year, with Auscann's share price down 53.3% since 2 January. By comparison the All Ordinaries Index (ASX: XAO) is down 1.8% for the year.

What do Auscann and Cannpal do?

Auscann is a pharmaceutical company based in Western Australia. Its focus is on developing, producing and distributing a range of cannabinoid treatments for use in Australia and internationally.

CannPal Animal Therapeutics develops natural plant-based therapeutic products for pets. The company has a research focus on cannabinoids, the active pharmaceutical ingredients extracted from the cannabis plant, to provide veterinarians and pet owners a means to treat animals in a safe and ethical way.

What's the plan?

Auscann advised the ASX this morning that it had entered into a SID to acquire 100% of Cannpal for around $17.5 million.

That works out to 18.4 cents per Cannpal share, 53% more than the closing price of 12 cents per share on Thursday 12 October.

The company expects the transaction to create a larger and complementary product offering across both human and animal health, with 2 products already in the market and 2 more products expected to be launched within 12 months.

Other benefits should be increased research and development (R&D) capabilities and an expanded geographic footprint.

Commenting on the deal, CannPal chair Geoff Starr said:

There is a great logic to combining Cannpal Animal Therapeutics Ltd with AusCann Group Holdings Ltd with the new business having enhanced capability to exercise the potential for new and stronger commercial pathways.

The synergies around local and overseas market knowledge and research and development know-how will enable faster to market solutions. It represents a unique and compelling value proposition for both companies.

Auscann chair Max Johnston added:

The combined business is expected to have the financial resources and technical expertise to accelerate the growth, commercialisation and market penetration of its pipeline products in Australia and offshore.

The scheme still needs to clear the normal hurdles, such as receiving Cannpal shareholder and court approvals.

The Auscann and Cannpal share prices emerge from their trading halts tomorrow.

Motley Fool contributor Bernd Struben 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.

More on Share Market News

a man in a business suite throws his arms open wide above his head and raises his face with his mouth open in celebration in front of a background of an illuminated board tracking stock market movements.
Broker Notes

Analysts say these ASX shares are top buys in June

Brokers are urging investors to buy these shares. Let's find out why.

Read more »

Ten happy friends leaping in the air outdoors.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors finished the trading week on a high note this Friday.

Read more »

A man in trendy clothing sits on a bench in a shopping mall looking at his phone with interest and a surprised look on his face.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Brainchip, Findi, Lottery Corp, and REA shares are falling today

These shares are ending the week in the red. But why?

Read more »

Happy teen friends jumping in front of a wall.
Share Gainers

4 ASX 200 shares leading the charge higher this week

Investors have been piling into these four ASX 200 shares this week. But why?

Read more »

Woman and man calculating a dividend yield.
REITs

What price target does Macquarie have on Goodman Group shares?

Goodman Group posted an interesting set of numbers in Q3. Here's Macquarie's take.

Read more »

A happy investor sits at his desk in front of his laptop and does the mexican wave with his arms to celebrate the returns from his ASX dividend shares
Share Gainers

Why Catapult, Champion Iron, Healthco, and Meeka Metals shares are pushing higher today

These shares are ending the week on a high. But why?

Read more »

Miner looking at a tablet.
Broker Notes

Why Macquarie expects this ASX 200 copper stock to surge 36% in a year

Macquarie forecasts some hefty gains ahead for the ASX 200 copper miner. But why?

Read more »