Cannabis company InterCure (TASE: INCR), headed by CEO Alexander Rabinovitch and chairman Ehud Barak, has announced an agreement with Austrian company MediCann on a joint venture for developing cannabis markets in Austria and Luxembourg. MediCann has committed to invest €10 million into the InterCure Austrian subsidiary, which will be 51% owned by InterCure. The management team will consist of both InterCure and MediCann executives.
InterCure is traded on the Tel Aviv Stock Exchange at a market cap of NIS 744 million. This Thursday, April 8, the company is to be merged into Subversive Acquisition LP, a SPAC traded in Toronto, and then to be listed on Nasdaq. InterCure's shareholders approved the transaction on April 1.
InterCure's valuation for the purposes of the merger is $300 million, still higher than its current market cap. Subversive Acquisition LP raised $65 million in a private placement for the investment in InterCure, in addition to the $225 million already invested in it by investors whom it has to persuade to stay with the InterCure deal.
InterCure has already started exporting cannabis, initially in Germany, in collaboration with Tilray.
"InterCure will replicate the successful model of its subsidiary Canndoc in Israel and will establish and manage the distribution, marketing, and sales of Canndoc's products in selected countries in Europe. Similar to InterCure's leading Israeli model, the operation will be vertically integrated and will include both online and retail distribution for Canndoc's branded products. The partnership is part of InterCure's international expansion strategy to major markets around the world. Austria has one of the most developed CBD wellness markets in Europe, and according to the Brightfield Group, sales of CBD products in the country reached over $80 million USD in 2019. Furthermore, Austria is in the early stages of developing a local medical cannabis market. In addition, Luxembourg is expected to be among the first European countries to allow the marketing and sale of adult-use cannabis for recreational purposes," the company's announcement states.
"We are happy to join forces with MediCann's team who have years of experience in retail and vast knowledge of the local markets," Rabinovitch said. "The expansion of the company's operations to a central European country is part of InterCure's international expansion strategy. This is an expression of trust, which is reflected in the investment of €10 million, in the company's vision, its business model, quality and competitive advantages of its brands."
MeciCann founder Elijahu Chassidov said: "As partner of InterCure, a leader of the Israeli cannabis market, MediCann is poised to exploit the rapid pace of growth of the European market and the increasing demand for access to premium quality cannabis products.
InterCure's financials released last week showed sales of NIS 27 million in the fourth quarter of 2020, 15 times the figure for the fourth quarter of 2019 when it first started selling cannabis in substantial quantities, and 20% more than in the previous quarter. InterCure sees sales of $74.4 million and EBITDA of $24.6 million in 2021, and sales of $137 million and EBITDA of $51.5 million in 2022.
Published by Globes, Israel business news - en.globes.co.il - on April 5, 2021
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