AusCann has sold a 52% stake in animal health company CannPal, a move the company says will free the business from two years of near-stagnation and position it for growth.
The share sale agreement transfers control of CannPal to founder Layton Mills through a newly established vehicle called Animal Health Holdings (AHH), returning the company to private ownership.
Mills, who sold CannPal to AusCann for A$17.5 million in November 2020 and became group chief executive in early 2021, holds a joint 50% share in AHH alongside AusCann's departing chief scientific officer Margaret Curtis.
Mills announced he was leaving AusCann last September and has since drawn public attention as a participant on TV reality show Married at First Sight.
AusCann will retain a 48% shareholding in CannPal, though AHH will bear all current and future development and commercialisation costs.
In an ASX announcement, AusCann said its original acquisition of CannPal had been intended to speed up the commercialisation of approved human and animal health products to "offset headwinds resulting from the slower than expected uptake of the Special Access Scheme".
Those plans were thrown off course by a sharp decline in cannabis sector valuations and capital markets that proved largely unresponsive to investment pitches.
The difficult conditions prompted a business review that ultimately led to the decision to partially divest CannPal.
"AusCann believes the proposed structure presents AusCann and its shareholders with the most upside… to unlock the future value of the CannPal assets while reducing any ongoing expenses and liabilities associated with the animal health business," the company said.
"Specifically, AusCann believes that a privately held and focused animal health company is better positioned to attract, secure and maintain strategic partnerships and resources required for the continued development and commercialisation of AusCann's animal health assets."
AusCann has secured the right to reacquire the CannPal shares for $1 if AHH fails to meet agreed development and commercial milestones.
AHH is currently in discussions with prospective investors.
