Reports: Former cannabis heavyweight Tikun Olam to sell Israeli assets for $42 million
Published September 17, 2019
Tikun Olam, once one of the world’s leading medical cannabis companies, is selling its domestic assets for $42 million – or about half of its asking price of $100 million – according to Israeli media reports.
Cannbit Pharmaceuticals has reportedly agreed to buy Tikun Olam’s operations in Israel.
Rivals Bazelet Group and InterCure were also in the mix, Calcalist, a daily business newspaper, reported.
Tel Aviv-headquartered Tikun Olam’s international assets in Greece, Australia, the United States and Canada are not part of the sale.
A court sided with the ministry in August.
The court said Cohen would need to cut his stake from 70% to under 5% for the company’s license to be reinstated.
As recently as last last year, Tikun Olam controlled 40% of the domestic market.
Today that number stands at about 6% of Israel’s 46,000 patients.
Tikun Olam started running into serious problems in November when it was hit with a temporary closure after the Ministry of Health raised questions over a new drying process.
A spokesperson for Tikun Olam did not immediately respond to media queries.
Vancouver-based Namaste Technologies owns 10% of Cannbit.
Tikun Olam was an early investor in Ontario-based Corporation before it was purchased by Aurora Cannabis.
Weekly International Marijuana News Delivered Right to Your Inbox!Tikun Olam, once one of the world’s leading medical cannabis companies, sold its domestic assets for $42 million, or about half of its asking price.
In Israel’s Biggest Medical-cannabis Deal, Cannbit Buys Tikun Olam
$41.5 million sale comes after Tikun Olam failed to get permission to grow cannabis commercially
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In the country’s largest ever medical-marijuana merger, publicly traded Cannbit Pharmaceuticals said on Monday it was buying Tikun Olam’s Israel operations for a price that could reach as high as $41.5 million.
The deal came after Cannbit sharply reduced its asking price for troubled Tikun Olam, which is controlled by Tzachi Cohen. Completion of the sale hinges on approval by the health ministry.
Cohen is a global medical marijuana entrepreneur who made $255 million from the sale of MedReleaf, in which he had a 13% stake, to the Canadian cannabis giant Aurora last year. He pioneered the Israeli medical cannabis industry by founding Tikun Olam as a nonprofit in 2005.
Cohen decided to sell the company’s Israel operations after the Jerusalem District Court backed a ministry decision in August against renewing the firm’s license to grow the cannabis locally unless he ceased to be a controlling shareholder. Cohen was suspected of using drugs and of having underworld ties.
Medical marijuana is an up-and-coming industry in Israel, which has a long history of research and development in the field. The government approved exports of medical marijuana in April.
But excitement over the prospects for export markets shared by the government, which sees the industry as a way of creating jobs and generating tax revenue, has been dampened by worries that criminals will infiltrate the industry. Police concerns have held up export approvals.
Cohen had originally sought as much as $60 million for Tikun Olam and a 5% stake in Cannbit, which is controlled by an investor group led by Barak Orzen, and 5% royalties on future sales.
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The sides settled on a lower price, comprising $23.5 million in cash to be paid immediately plus another $18 million if the merged company reaches a market value of 1 billion shekels ($290 million at current exchange rates) in the next five years.
Cannbit shares were up 12.6% at 11.22 shekels in Tel Aviv Stock Exchange trading late on Monday, giving the company a market cap of 246 million shekels.
Cohen will also get a 5% stake on Cannbit as well as royalties equal to 3.2% of sales. Cannbit is expected to change its name to Tikun Olam/$41.5 million sale comes after Tikun Olam failed to get permission to grow cannabis commercially ]]>