In one fell swoop, Cannbit purchased Tikun Olam and thus ended this period of drama and uncertainty.
Last month, we reported on the legal scandal that forced Tikun Olam’s founder to resign and give up his shares of the company. Due to alleged connections with criminal organizations, he was declared “legally unfit” to hold more than 5% percent of any cannabis company’s stocks.
In its prime, Tikun Olam was the largest medical cannabis producer in Israel, serving up to 10,000 patients every month. Today, that number has dropped to roughly 2,500 per month. The company still owns a state-of-the-art growing facility at Bet Yehoshua, which is up to regulatory standards, as well as a processing facility at Tsiporit which is still under construction.
Should this processing facility come to fruition, it will be the largest of it’s kind, capable of capable of having products on the market within 6 months. As it stands, Tikun Olam currently oversees cannabis activities in many different countries including the United States, Australia, and Greece.
Amid the recent scandal, Tikun Olam came under fire from the Ministry of Health and much of their professional activity was restricted. They also began to lose their reputation as a global industry leader.
This left the company with few options but to sell. At the start of negotiations, company owner Yitzhak (Tzachi) Cohen demanded $100 million for Tikun Olam, as well as an ongoing percentage of future income. However, they were talked down considerably by Cannbit, another Israeli medical cannabis company.
Cannbit signed a memorandum of principles to purchase Tikun Olam for a total of $42 million, with a caveat to pay an additional $18 million of Cannabit reaches a market cap of $1 billion within the next 5 years. This total is considerably lower than Cohen’s original asking price.
“This deal positions Cannbit as a genuine leading company active along the whole cannabis value chain,” said Cannbit’s CEO, Ifat Kariv. “This deal will enable Cannnbit to position itself in advance of an offering overseas on the basis of Tikun Olam’s strong brand. Its facility will be one of the largest of its kind in the world.”
Cannbit utilizing a public offering as their main form of financing in the acquisition. The company warned that it’s uncertain whether a final agreement to purchase Tikun Olam will be reached.