Intercure has signed a definitive agreement with Cann Pharmaceutical, which trades as Better, to acquire 100% of the company.
The deal, which is expected to be finalised at the start of Q3 2022 subject to approvals from the Isreali Medical Cannabis Agency (IMCA), will see Intercure obtain Better’s commercial activities both in Israel and abroad, alongside its intellectual property, cultivation site and unique strains.
Better’s $35m purchase price will be paid for with Intercure shares at a valuation of $10 per share, subject to a three-year lock-up plan.
The announcement saw Intercure’s shares rally for a second time in a week, jumping from 2227ILS on the Tel Aviv Stock Exchange, to highs of 2365ILS on Wednesday morning, before levelling off throughout the day.
While this represented a rise of around 6.2%, it built on further double digit gains Intercure saw last week following the release of its preliminary Q4 results.
While its full financial figures are not due to be published until March, Intercure says it expects revenues to hit over CAD$31m for the quarter, representing a three-fold year-on-year increase.
For the full year, Intercure said revenues were expected to top CAD$87m marking a 250% year-on-year growth rate.
Buoyed by last week’s news that Israel is moving to further liberalise cannabis regulation, launching proposals which will mean recreational cannabis use is no longer considered a criminal offence, Intercure’s stock has shot up over 22% in the last month.
According to Intercure, the deal will enable it to expand its ‘global reach and accelerate its international expansion strategy to major markets worldwide’.
Better has two cultivation facilities capable of producing 3 tonnes of medical cannabis a year, which it says it distributes to ‘tens of thousands’ of patients across its two key markets, Israel and Australia.
This will allow Intercure to establish a foothold in another international market, after announcing plans to expand its operations internationally for the first time in December 2021.
“InterCure and Better’s combined business operations are expected to create a new force in the international cannabis industry that will further accelerate our global expansion plans and opportunities and the consolidation process,” Intercure CEO Alex Rabinovitch said.
“We believe our combined business strengths and capabilities will help us to connect more effectively with new and existing patients in Israel and internationally. Once we complete this acquisition, InterCure’s portfolio will include additional leading brands, distribution network, and unique partnerships, positioning us to deliver sustainable value for all stakeholders.”
Intercure’s CFO Amos Cohen added: “InterCure is continuing its growth momentum while leading the consolidation of the medical cannabis market. This acquisition is a first of its kind and is another step in the implementation of our strategy and strengthens InterCure’s position.”