CBD supplier Cannaray has cancelled its £18.6m reverse takeover of Cellular Goods due to a drop in the target’s share price.

Since the deal was announced in September, Cellular’s share price has fallen from 1.95p to 0.49p, with the market cap decreasing from £10.1m to £2.5m.

“The value they offered Cannaray’s shareholders is a lot less now,” said a source familiar with the discussions.

“They tried to renegotiate, but Cellular wasn’t willing to give a greater share percentage, so Cannaray pulled out.”

The disagreement over finances was confirmed by Cellular, whose spokesman said that as the companies “moved through the transaction process, we were unable to reach an agreement on final deal terms on the asset to be acquired”.

Cellular concluded “that the deal was not in the interests of either party and wouldn’t deliver long-term value to Cellular’s shareholders”.

The collapse in the deal means that Cannaray will have to find another way to list its Cannaray CBD and Love CBD brands publicly.

The company has spent several years mooting an IPO, having publicly targeted a valuation “north of £100m” in February 2020.

Cellular will also continue to be excluded from the edible CBD market, having been forced to exit the category last April after it failed to comply with the FSA’s novel foods regime.

Since then the company has focused on its cosmetics range, where it is “in positive conversations with potential retail partners” and anticipating an expansion of sales channels this year.

“Our age-prevention skincare and Rejuvenating lines have shown positive momentum in the first quarter of the year,” he added, noting that Cellular still has a promotion deal with Danish model Helena Christensen.