Manor and Kfir Gindi from the Gindi Capital real estate group are negotiating to acquire a 50% controlling interest in Cannomed Medical Cannabis Industries Ltd. (TASE: CNMD) in order to merge it into EU Biopharm, which they own. Ahead of the merger, Cannomed will raise NIS 18 million. EU Biopharm plans to invest at least NIS 3 million in Cannomed's financing round.
Cannomed's share price is up 22% today, pushing the company's market cap up to NIS 24 million.
This deal cancels a planned investment of at least NIS 18 million by several investment groups, led by luxury kitchens importer Ran Presberg. Cannomed signed two other investment deals in the past year that were canceled: one with AM:PM cofounder Ran Belinkis and one with Mega Or controlling shareholder Zahi Nahmias.
EU Biopharm is building an indoor cannabis cultivation facility and a cannabis factory in the Tsiporit industrial zone (close to the plant being constructed by Tikun Olam, which will soon be taken over by Cannabit). EU Biopharm says that the planned factory and cultivation facility will cover three dunam (0.75 acres), and will have a production capacity of eight tons a year, not a large quantity in comparison with the aims of the other companies in Israel. According to EU Biopharm, commercial activity at the facility will begin towards the end of 2020.
Meanwhile, the company has signed a binding agreement for the distribution of three tons of produce with German drug distribution company ACA Muller. EU Biopharm has a holding in the German company, which has a cannabis distribution license. EU Biopharm's was valuated at NIS 60 million for this deal. EU Biopharm's shareholders will receive additional shares in Cannomed when commercial activity begins in the facility, and revenue from it reaches NIS 35 million and/or the operating profit is at least NIS 20 million.
The leading minority shareholders in EU Biopharm are Adv. Hagit Weinstock and Adv. David Zehavi, owners of the Weinstock Zehavi law firm, which has been specializing in cannabis deals, mainly overseas, in recent years.
Cannomed is a cannabis cultivation company controlled by Revital Gerber Accav with a 30% stake. The company owns a growing facility in the Jordan Valley that is currently in the validation stage in preparation for commencing commercial activity. Cannomed also previously signed an agreement with Teva Adir whereby Cannomed will grow cannabis on a 7.2-dunam (1.8-acre) site under Teva Adir's professional guidance, and sell the produce. Teva Adir recently encountered a problem when the Ministry of Health refused to approve one of the shareholders in its operating company, Cannamedic. The company is in the process of finding a solution to this problem.
It was reported yesterday that Gindi Capital had sold its stake in the TLV Mall to Blue Square Real Estate for NIS 225 million in cash, which will cover the loans taken by the company. Gindi Capital now has money to develop new projects, after having had to sell a substantial proportion of its assets when the TLV project ran into difficulties. Manor and Kfir Gindi and Ori Levy retained ownership of the four Gindi TLV residential towers.
Published by Globes, Israel business news - en.globes.co.il - on December 24, 2019
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