Ralco to invest NIS 20m in cannabis co Together

Yohanan Danino Photo: Together

Together's share price is up 6% in today's trading, following the announcement, reflecting a NIS 180 million market cap.

Israeli electrical appliances company Ralco Agencies (TASE: RCLO) will invest at least NIS 20 million and a NIS 5.5 million bridging loan in medical cannabis company Together Pharma (TASE: TGDR), the companies have announced. Together's share price in this agreement is NIS 2.975, 10% lower than this morning's market price.

Together's share price is up 6% in today's trading, following the announcement, reflecting a NIS 180 million market cap. The deal also includes free options, so the actual discount on the market price is even greater. Ralco's share price also rose 6% following the announcement, boosting its market cap to NIS 109 million; Ralco may have more cash than Together, but the latter's market cap is higher. The deal will give Ralco an 11% stake in Together.

This investment indicates that interest in the cannabis sector is beginning to resume, after a period of declining share prices on both the TASE and global markets, resulting in falling off of the media buzz and the pace of deals in the sector. Ralco's activity is not synergetic to that of Together, but it appears that the electrical appliances company has found itself an instrument for diversifying its activity and adding some spice to its risk/opportunity profile.

"We are delighted with the expression of confidence by Ralco, a veteran and well-established public company, which is making a substantial investment after recently considering an entry into the cannabis field through a number of companies and eventually choosing us," Together chairman Yochanan Danino said. "We have found excellent partners with proven business capabilities who will join the company board of directors and management team.

"The proceeds from the financing round ensure that Together's strategic business plans will be carried out, including building a facility in Israel and obtaining GMP authorization for it, completion and EU-GMP authorization of the plant in Uganda, and promotion of additional commercial agreements."

Together is interested in beginning actual growing and marketing of cannabis in the coming months from both its plant in Ashkelon and the plant in Uganda. It is also conducting research and development of its medical and cosmetics products, and has acquired R&D company Cannabliss for NIS 14 million.

Together, which had NIS 4.9 million in cash as of the end of the second quarter, still has no revenue, and this investment is therefore very significant for the company.

Published by Globes, Israel business news - en.globes.co.il - on September 2, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Yohanan Danino Photo: Together
Yohanan Danino Photo: Together
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