Why the ECS (ASX:ECS) share price is soaring 16% higher today

The ECS Botanics (ASX: ECS) share price is rocketing today on news the company will acquire a Victoria-based medical cannabis cultivator.
The post Why the ECS (ASX:ECS) share price is soaring 16% higher today appeared first on The Motley Fool Australia. –

The last piece of the jigsaw being fitted, indicating good news for a share price on merger or acquisition

The ECS Botanics Holdings Ltd (ASX: ECS) share price is a top ASX performer today, up 16%. This follows news that the company plans to acquire Victoria-based medical cannabis cultivator, Murray Meds.

Located on the Murray River in North Western Victoria, Murray Meds operates a licenced medical cannabis cultivation and manufacturing facility. The company produces around 3,500kg of medicinal cannabis per year consisting of dried flower, oils and tinctures. Murray Meds has harvested and packed 350kg so far this year, even before the full picking season starts in April.

During morning trade, the ECS share price shot up to 5.4 cents. However, its shares have since retreated to 5.0 cents at the time of writing, up 16.28%.

What’s pushing the ECS share price higher?

ECS Botanics advised that it has signed a binding term sheet with Flowerday Holdings Pty Ltd. The acquisition will see ECS own 100% of the issued capital in Murray Meds, and 100% of the issued share capital in Flowerday Farms. In addition to the transaction, ECS will also purchase Flowerday Land Property.

Under the deal, ECS will pay $1 million for the rights to 100 million fully paid ordinary shares, deemed at an issue price of 5 cents per share. The company will pay a further $1.5 million within 12 months, pending completion of the Flowerday Land Property purchase.

ECS Botanics said the shares will be escrowed on a split basis for 12 (50%) and 24 (50%) months.

The company said once the acquisition is concluded, ECS will be one of largest vertically integrated medicinal cannabis businesses in Australia. The deal complements the company’s main operations based in Tasmania, as well as recent agreements such as its MediPharm Labs takeover.

What did management say?

ECS managing director Alex Keach welcomed the acquisition, saying:

As a combined group, we are positioning to become the largest and most geographically diversified cannabis producer in Australia. Murray Meds has harvested its maiden THC crop and currently has another crop growing.

This deal allows ECS to deliver earlier and more substantial revenue, while adding value to cannabis as communicated in our December announcement to purchase equipment for the extraction of cannabis resin. The deal sets us up nicely to become a globally recognised large scale, low-cost cultivator and manufacturer of medicinal cannabis.

Murray Meds founder and managing director Nan-Maree Schoerie, added:

The opportunities that this deal creates for Murray Meds, its customers and employees is tremendously exciting.

Both organisations are very grounded in their approach to delivering affordable medicinal cannabis as naturally and sustainably as we can, with shared values and an inherent drive to deliver for patients and shareholders.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Motley Fool contributor Aaron Teboneras 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.

The post Why the ECS (ASX:ECS) share price is soaring 16% higher today appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!