IM Cannabis Acquires Israel's Largest Retail and Online Phar IM Cannabis Acquires Israel's Largest Retail and Online Pharmacy Business from Panaxia, Creating a Vertically Integrated Global Platform for the IMC Brand
With Israel's Fast-Paced E-Commerce Adoption and Cannabis Market's High Growth Rate (Averaging 4 Percent1 per Month), Panaxia's Online Platform to Support Patient Base Expansion
Acquisition Broadens IMC's Patient Offering in Israel, Facilitates Stronger Direct Patient Relationships and Enables the Company to Grow its IMC Brand Awareness
Offers Additional Opportunity to Generate Revenue and Margin on Third-Party Products and is Synergistic with IMC's Premium and Super-Premium Canadian Indoor Production Portfolio
Adds Key Storage, Distribution and Delivery Capabilities, Plus Established Call Center to Support Growth as Israeli Market Prepares for Potential Adult-Use Recreational Cannabis Legalization
TORONTO, ON / GLIL YAM and LOD, ISRAEL / April 30, 2021/IM Cannabis Corp. ("IMC" or the "Company") (CSE:IMCC)(NASDAQ:IMCC), a multi-country operator ("MCO") in the medical and adult-use recreational cannabis sectors with operations in Israel, Germany and Canada, announced today that its fully owned Israeli subsidiary, IMC Holdings Ltd., along with Panaxia Pharmaceutical Industries Israel Ltd. and Panaxia Logistics Ltd., part of the Panaxia Labs Israel, Ltd. group of companies ("Panaxia") (TASE: PNAX), Israel's largest manufacturer of medical cannabis products, have signed a definitive agreement pursuant to which IMC will acquire Panaxia's trading house and in-house pharmacy activities. This agreement will combine its home-delivery services online pharmacy business operating under the name Panaxia to the Home and customer service center, along with certain distribution assets, and an option to purchase a pharmacy with licenses to sell medical cannabis to patients from Panaxia for an aggregate purchase price of $7.2 million (the "Transaction"). Further details on the Transaction are described below.
Panaxia to the Home currently stocks the largest medical cannabis products selection in Israel, which it offers to patients across the country through an online platform with temperature-controlled home delivery. Panaxia to the Home also operates a customer service center for patient support, as well as a team of skilled pharmacists who specialize in providing targeted counseling to patients on how best to use medical cannabis products.
"Entering 2021, we told shareholders that it would be important for IMC to enter the retail market in Israel to fully integrate the global revenue and margin opportunity of its multi-country operating platform," said Oren Shuster, CEO of IMC. "The Transaction delivers on that strategic imperative, immediately making IMC one of the largest single retail medical cannabis providers in the country, allowing for ownership of the end patient relationship and the creation of synergies with its premium and super-premium production operations in Canada. In advancing toward a truly global, vertically integrated cannabis platform, IMC is positioned to demonstrate the full power of its business model in 2021 with a focus on building lasting shareholder value."
Transaction Details
The Transaction will close in two stages, with the option of a third stage. Upon the first closing, all online-related activities and intellectual property are transferred to the Company, including, but not limited to, the online sales platform for medical cannabis products, a CRM platform and use of a large storage facility to support the operations of Panaxia to the Home. The second closing, which is subject to Israeli Ministry of Health ("MOH") approval, is expected to occur before July 30, 2021, or upon receipt of MOH approval. Upon the second closing, Panaxia will transfer its IMC-GDP license for distribution of medical cannabis to the Company. The Transaction includes an option to acquire Panaxia's pharmacy, including licenses to dispense and sell to cannabis patients, which will become effective as of Feb. 15, 2022.
The Transaction purchase price will be satisfied by a combination of $2.9 million in cash and $4.3 million in common shares of the Company ("Consideration Shares"). The Transaction's $2.9 million cash component will be paid in two installments: the first half upon the first closing, which is expected to occur within 10 business days of the definitive agreement signing, and the second half on May 20, 2021. IMC will issue the Consideration Shares to Panaxia in two installments: the first half will be paid by July 30, and the second half will be paid upon the second closing. If the second closing occurs prior to July 30, then full consideration will be completed by the second closing. The Consideration Shares component of the $4.3 million will be determined based on an issue price equal to the closing price of the Company's common shares on the Nasdaq Capital Markets immediately prior to the second closing.