Together (TASE: TGDR), which specializes in cultivating and producing medical cannabis, has announced the signing of a binding Memorandum of Understanding (MoU) to acquire control (50.01%) from the German company with which it has previously signed a supply agreement to supply about 12.5 tons of medical cannabis produce worth up to €50 million, at the beginning of the month. The company is examining financing the €2 million acquisition, in cash or assets, which will be recorded as an owner's loan. The parties will work towards signing a detailed agreement within 90 days.
Together estimates that it will be able to sell its produce at a price that is currently about €10-12 per gram in Germany of medical cannabis through direct sales because the German company has a distribution agreement with 100 pharmacies. The price in Europe per gram of medical cannabis is relatively high compared with the price in North America and stems from expectation for high demand, due to regulatory proceedings as well as low supply of produce throughout Europe.
The German company says it is in the final stages of receiving an import license and a distribution license for medical cannabis in Germany and has entered into an agreement with a pharmacy chain that owns over 100 pharmacies in Germany. The company also holds a R&D license for medical cannabis in Germany, because the German company conducts R&D on unique strains of medical cannabis and examines its influence on various diseases. The German company estimates that it expects to receive an import license and formal distribution license in September 2018.
Together CEO Nissim Bracha said, "We are delighted with Together's current international expansion through realizing the business strategy of creating a large and major company in the world cannabis market. As part of our continued contacts with the German customer, we took the decision to combine the capabilities of the two companies in order to bring about fulfillment of better synergy. On completion of the deal, Together will operate throughout the value supply chain in the cannabis sector - from R&D of unique strains as IP, through cultivation, manufacturing products, marketing and distribution and on to reaching the end-user customer. In our view, Germany is the first substantial anchor for our operations in Europe, while we are setting up a farm for additional cultivation outside of Israel, in Europe, from where was can supply medical cannabis produce to Germany and other countries in the region. We believe that with active involvement in every stage, the company will enjoy the value created while maximizing value for all the company's shareholders.
Published by Globes [online], Israel business news - www.globes-online.com - on August 29, 2018
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