IM Cannabis To Buy Jerusalem-Based Medical Marijuana Pharmacy For $4.9M In Cash And Stock

IM Cannabis Corp. IMCC, IMCC will acquire the majority of Jerusalem’s leading medical cannabis pharmacy, Oranim. The cannabis company confirmed Wednesday that its Israeli subsidiary IMC Holdings Ltd. will acquire 51.3% of the outstanding ordinary shares of Oranim Plus Pharm Ltd., which holds the majority of Oranim. 

Centrally located in Jerusalem, Oranim is a well-established brand with a fourteen-year track record of serving the needs of medical cannabis patients in the area. For the twelve months ending October 31, 2021, Oranim generated revenues of approximately $16.5 million, with a gross margin from cannabis activity of approximately 25% and positive EBITDA. Oranim holds a pharmacy license from the Israeli Medical Cannabis Unit to sell medical marijuana.

Deal Details

IMC Holdings has signed a definitive agreement for total consideration of approximately NIS 11.94 million (approximately $4.9 million), to be paid in cash and common shares of the company.

The cash consideration component of around NIS 10.40 million will be paid in two installments, with 50% paid upon signing of the definitive agreement and 50% payable upon IMCU approval.

The share consideration component of NIS 1.54 million will be paid at the closing of the acquisition with the number of issuable shares based on the average closing price of IM Cannabis' common shares on the Nasdaq Capital Market for the 14 trading days prior to closing.

The company expects to complete the transaction during the second quarter of 2022.    

"As one of the largest medical cannabis pharmacies in Israel, the acquisition of Oranim positions IM Cannabis as one of the largest distributors of medical cannabis in the country and provides IM Cannabis with a strategic entry point into its largest city and most populated area,” Oren Shuster, CEO of IM Cannabis stated. “Consistent with our stated strategy of vertical integration, this transaction increases our distribution reach in Israel, provides margin enhancing opportunities, and gives medical cannabis patients access to high quality, premium cannabis. With rapid growth in the Israeli medical cannabis market and in anticipation of potential legislative reform, the addition of Oranim and their dedicated employees will be a positive contribution to IM Cannabis."

With the signing of the definitive agreement of the Oranim acquisition, IM Cannabis has signed four definitive agreements with cannabis pharmacies in Israel with combined run-rate revenue of approximately $44 million.

Price Action

IM Cannabis shares traded 5.4% lower at $4.03 per share at the time of writing Wednesday morning.

Photo: Courtesy of Esteban Lopez on Unsplash