Ecofibre gives Hemp Black a boost with $59m US acquisition

29 July 2020, Written by Matt Ogg

Ecofibre gives Hemp Black a boost with $59m US acquisition

Australia's largest listed medicinal cannabis company Ecofibre (ASX: EOF) will acquire a portfolio of high-performance textile businesses and assets in what has been described by CEO Eric Wang as an "incredibly important strategic move" to accelerate the growth of Hemp Black.

While most of Ecofibre's revenue comes from its Ananda range of hemp-derived CBD oils and topical creams along with a hemp-based food business, a long-term project has been in the works called Hemp Black using the material for high-tech uses ranging from clothing to healthcare to building materials.

More recently, Hemp Black pivoted to include personal protective equipment (PPE), selling washable masks whose yarn is infused with CBD and copper to provide anti-microbial and anti-odor properties.

Now the group is taking a vertical integration approach to the prospective venture, announcing the US$42 million (AUD$58.7 million) purchase of its North Carolina-based manufacturing partner TexInnovate, through a deal comprising 25 per cent cash, 25 per cent Ecofibre stock and a 50 per cent earnout.

Wang says TexInnovate president Jeff Bruner has introduced Ecofibre and its Hemp Black technology to the company's existing core customer base who operate at the premium end of their respective industries.

"I am particularly excited at the potential of working closely with Jeff to bring Hemp Black to fruition with such a high quality group of partners," says Wang.

Australia's top 20 cannabis companies

For the past two years Ecofibre has been working with Thomas Jefferson University, led by Hemp Black chief innovation officer Mark Sunderland, to develop an intellectual platform the natural anti-microbial and conductive properties of hemp into manufacturing supply chains.

"Two years ago when I was introduced to the concept, research and patents being developed by Hemp Black, I quickly became a significant shareholder," says Bruner.

"Since 2018, I continue to see the very strong commercial potential for this technology to not only solve problems that our customers find today, but more importantly advance the quality and technical aspects of a very wide array of products.

"During my career there have been several innovations that led to step function shifts in our industry. I believe Hemp Black has the technology to underpin another step function shift in how textiles can enable and perform."

The asset sale agreement is still subject to due diligence and is scheduled for completion on 1 September 2020.

To fund the cash component payable at completion for the assets and property, Ecofibre has conducted a placement to raise $29.5 million at an issue price of $2.50, which was the stock's last closing price.

EOF shares are up 7.6 per cent in early trading at $2.69 each, driven by the acquisition but also a 119 per cent jump in net profit after tax (NPAT) to $13.2 million for FY20. Meanwhile, revenue rose 42 per cent to $50.7 million.

Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.

Business News Australia

Author: Matt Ogg





Contact us

Email News Update Sign Up Contact Details

PO Box 1487
Mudgeeraba QLD 4213

LoginTell a FriendSign Up to Newsletter