Transaction expands IMC's footprint into
Israel's largest city while
positioning the Company as one of the largest retailers of medical
cannabis in the country
TORONTO, and GLIL YAM, Israel, March 30,
2022 /PRNewswire/ -- IM Cannabis Corp. (the
"Company" or "IM Cannabis") (CSE: IMCC) (NASDAQ:
IMCC), a leading medical and adult-use recreational cannabis
company with operations in Israel,
Canada, and Germany, has completed the strategic
acquisition of 51% of the rights in Oranim Pharm partnership
("Oranim Pharm"). Oranim Pharm is one of the largest pharmacies
selling medical cannabis in Israel
and the largest pharmacy selling medical cannabis in the
Jerusalem area. The acquisition
was completed through IMC Holdings Ltd. ("IMC Holdings"), a
wholly-owned subsidiary of IM Cannabis Corp., following receipt of
all requisite approvals, including from the Israeli Medical
Cannabis Agency ("IMCA").
Centrally located in Jerusalem,
Oranim Pharm has a successful 14-year track record of serving the
needs of its loyal customer base in the area. For the twelve months
ending October 31, 2021, Oranim Pharm
generated revenues of approximately $16.5
million, with a gross margin1 from Cannabis
activity of approximately 25% and positive EBITDA[1]. Oranim Pharm
holds a pharmacy license from the IMCA to sell medical cannabis to
patients.
"The successful acquisition of Oranim Pharm puts IM Cannabis at
the forefront of medical cannabis distribution in Israel," said Oren
Shuster, Chief Executive Officer of IM Cannabis. "As we make
further progress with our vertical integration strategy, this
transaction expands our reach in Israel with a strategic entry point into the
country's largest city. In addition, our ability to sell IMC brands
directly through the pharmacies we own allows us to increase our
margin profile while providing local medical cannabis patients with
increased access to high-quality, premium cannabis. Given the rapid
growth and potential upcoming legislative reform in the Israeli
medical cannabis market, we view the addition of Oranim Pharm to
the IMC family as a timely and mission-critical contribution to our
near- and long-term success."
Transaction Details
All amounts below are in Canadian dollars unless otherwise
stated.
IMC Holdings acquired 51.3% of the outstanding
ordinary shares of Oranim Plus Pharm Ltd., an Israeli company
holding 99.5% of the rights in Oranim Pharm, resulting in IMC
Holdings holding 51% of the rights in Oranim (the
"Acquisition").
As first announced in December
2021, IMC Holdings signed a definitive agreement in respect
of the Acquisition for total consideration of approximately
NIS 11.94 million (approximately
$4.6 million), to be paid in cash and
common shares of the Company. The cash consideration component of
approximately NIS 10.40
million (approximately $4.0 million) was to be paid in
two installments, with 50% (NIS 5.2
million) paid at signing of the definitive agreement and 50%
(NIS 5.2 million) will be payable in
the first quarter of 2023. In satisfaction of the share
consideration component of NIS 1.54
million (approximately $600,000), the Company issued 251,001 common
shares at a deemed issue price of US$1.9 (approximately $2.37) per share, calculated based on the average
closing price of the common shares of the Company on the Nasdaq
Capital Market for the 14 trading day period immediately preceding
March 28, 2022. The shares issued as
part of the Acquisition are subject to a staggered three-month
lockup commencing at closing.
About IM Cannabis Corp.
IM Cannabis (NASDAQ: IMCC, CSE: IMCC) is a leading international
cannabis company providing premium products to medical patients and
adult-use recreational consumers. IM Cannabis is one of the very
few companies with operations in Israel, Germany, and Canada, the three largest federally legal
markets. The ecosystem created through its international operations
leverages the Company's unique data-driven perspective and product
supply chain globally. With its commitment to responsible growth
and financial prudence, and the ability to operate within the
strictest regulatory environments, the Company has quickly become
one of the leading cultivators and distributors of high-quality
cannabis globally.
The IM Cannabis ecosystem operates in Israel through its commercial relationship
with Focus Medical Herbs Ltd. ("Focus Medical"), which
cultivates, imports, and distributes cannabis to medical patients,
leveraging years of proprietary data and patient insights. The
Company also operates medical cannabis retail pharmacies, online
platforms, distribution centres and logistical hubs through IMC
Holdings in Israel that enable the
safe delivery and quality control of IM Cannabis products
throughout the entire value chain. In Germany, the IM Cannabis ecosystem operates
through Adjupharm GmbH ("Adjupharm"), where it also
distributes cannabis to pharmacies to medical cannabis patients. In
Canada, IM Cannabis operates
through Trichome Financial Corp. and its subsidiaries TJAC and MYM,
where it cultivates and processes cannabis for the adult-use market
at its Ontario, Nova Scotia, and Quebec facilities under the WAGNERS and
Highland Grow brands.
Disclaimer for Forward-Looking Statements
This press release contains "forward-looking information" and
"forward-looking statements" within the meaning of applicable
Canadian and United States
securities laws (collectively, "forward-looking information").
Forward-looking information are often, but not always, identified
by the use of words such as "seek", "anticipate", "believe",
"plan", "estimate", "expect", "likely" and "intend" and statements
that an event or result "may", "will", "should", "could" or "might"
occur or be achieved and other similar expressions. Forward-looking
information in this press release includes, without limitation,
statements regarding the anticipated benefits of the Acquisition,
legislative reform in the Israeli medical cannabis market and
the Company's business and strategic plans.
Forward-looking information is based on assumptions that may
prove to be incorrect, including but not limited to the ability of
the Company to execute its business plan and the continued growth
of the medical and/or recreational cannabis markets in the
countries in which the Company operates or intends to operate, the
Company maintaining "de facto" control over Focus Medical in
accordance with IFRS 10, Focus Medical maintaining its existing
Israeli medical cannabis propagation and cultivation licenses and
the expected decriminalization and/or legalization of adult-use
recreational cannabis in Israel.
The Company considers these assumptions to be reasonable in the
circumstances. However, forward-looking information is subject to
business and economic risks and uncertainties and other factors
that could cause actual results of operations to differ materially
from those expressed or implied in the forward-looking information.
Such risks include, without limitation: the ability of the Company
to comply with applicable government regulations in a highly
regulated industry; the ability of the Company to successfully
integrate the Oranim Pharm into its existing operations; unexpected
changes in governmental policies and regulations affecting the
production, distribution, manufacture, import, export or use of
medical and/or recreational cannabis, as applicable, in
Israel, Germany and Canada; any change in the political
environment which would negatively affect the decriminalization
and/or legalization of recreational cannabis in Israel and Germany; conflict in Eastern Europe; and unexpected disruptions to
the operations and businesses of the Company as a result of the
ongoing COVID-19 global pandemic or other disease outbreaks.
Any forward-looking statement included in this press release is
made as of the date of this press release and is based on the
beliefs, estimates, expectations and opinions of management on the
date such forward-looking information is made. The Company does not
undertake any obligation to update forward-looking statements
except as required by applicable securities laws. Investors should
not place undue reliance on forward-looking statements.
Forward-looking statements contained in this press release are
expressly qualified by this cautionary statement.
Non-IFRS Financial Metrics
This press release includes reference to "EBITDA" and "Gross
Margin", which are non-International Financial Reporting Standards
("IFRS") financial measures. Non-IFRS measures are not recognized
measures under IFRS, do not have a standardized meaning prescribed
by IFRS, and are therefore unlikely to be comparable to similar
measures presented by other companies. The Company defines EBITDA
as earnings before interest, tax, depreciation and amortization.
EBITDA has no direct, comparable IFRS financial measure. The
Company defines gross margin as the difference between revenue and
cost of goods sold divided by revenue (expressed as a percentage),
prior to the effect of a fair value adjustment for inventory and
biological assets. The Company has used or included these non-IFRS
measures solely to provide investors with added insight into Oranim
Pharm's financial performance as context for the Acquisition.
Readers are cautioned that such non-IFRS measures may not be
appropriate for any other purpose. Non-IFRS measures should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS.
Company Contact:
Maya Lustig, Director Investor
& Public Relations
IM Cannabis
+972-54-677-8100
maya.l@imcannabis.com
Investor Relations:
Brooks Hamilton, Director
MZ Group – MZ North America
+1 949-546-6326
IMCC@mzgroup.us
[1] For an explanation of this metric, please refer to the
section of this press release titled "Non-IFRS Financial
Metrics"
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content:https://www.prnewswire.com/news-releases/im-cannabis-closes-previously-announced-acquisition-of-oranim-pharm-jerusalems-leading-medical-cannabis-pharmacy-301513754.html
SOURCE IM Cannabis Corp.