(Yicai Global) May 9 -- Galaxy Biomedical Investment Co. [SHE:000806] is set to invest in Yunnan Hansu Biotechnology Co., China's only biological processor with a license to extract cannabidiol (CBD), a non-psychoactive component, from Cannabis sativa.
Galaxy Biomed said yesterday that it signed a letter of intent with Hemp Investment Group Co. (HMI Group), who owns 100 percent of Yunnan Hansu Biotechnology's equity. Galaxy Biomed plans to increase Yunnan Hansu Biotechnology's capital and back the company through equity assignment to acquire the industrial hemp sector's most advanced biological extraction and separation technology as well as to expand the future development space.
HMI Group proposed that about CNY900 million (USD130 million) should be put up as transfer consideration for 90 percent equity of Yunnan Hansu Biotechnology. HMI Group is willing to promise that Yunnan Hansu Biotechnology's audited net profits in 2017, 2018, and 2019 will be no lower than CNY50 million, CNY62.5 million, and CNY78 million, respectively.
Due diligence has not been finished, and the parties have not reached a consensus on transaction details.
HMI Group specializes in the industrial hemp investment chain. It grows, extracts, researches, develops, produces, and sells industrial hemp products worldwide.
Yunnan Hansu Biotechnology holds the only license to extract CBD from Cannabis Sativa among domestic enterprises in China. It built China's first industrial hemp biological extraction and separation base conforming to good manufacturing practice standards.
This base is the largest monomer CBD extraction plant in the world, and can extract CBD for products with purities ranging from 20 to 99 percent. The facility was authenticated by Steep Hill and is competitive in the industrial hemp CBD extraction and separation field. There are clinical medical applications for the components that the facility extracts.
Industrial hemp's tetrahydrocannabinol (THC) content is lower than 0.3 percent.