December 2, 2019 / 12:54 PM / 6 days ago

Israeli cannabis firm Kanabo to be bought by UK's Spinnaker

(Reuters) - Kanabo Research has agreed to be bought by cash shell Spinnaker Opportunities (SOP.L) in what could lead to the first listing of a cannabis company on London’s main stock market and help the Israeli firm raise cash for clinical trials and newer products.

Spinnaker said on Monday the companies had agreed to a proposed reverse takeover, which would allow Tel Aviv-based Kanabo to bypass traditional listing rules.

Spinnaker did not disclose the deal value in a statement. However, in an email, the company’s chairman, Andy Morrison, said the deal size was “comfortably within” the 5 million to 30 million pound ($6 million-$39 million) range earmarked for an acquisition.

Medical cannabis is one of the fastest-growing sectors on the Tel Aviv stock exchange, and lawyers have said London has the potential to attract money from diverse sectors such as food and health, which uses cannabis as an ingredient in some products.

Kanabo Chief Executive Officer Avihu Tamir told Reuters in August that he had expected better prospects in London than in more saturated markets.

As part of its plan to list the combined company on the London Stock Exchange, Spinnaker also agreed to pump in 200,000 pounds into Kanabo.

The Israeli company already has a promise of 1.4 million pounds from the London-listed firm.

Kanabo supplies medical cannabis products that do not contain THC, the psychoactive ingredient in marijuana which causes hallucinations. Its products are delivered through a vaping device.

The LSE has not seen many pot firms in its indexes. GW Pharmaceuticals (GWPH.O), which makes marijuana-based epilepsy treatments, was listed on the bourse’s junior market between 2001 and 2016.

Reporting by Pushkala Aripaka and Noor Zainab Hussain in Bengaluru; Editing by Maju Samuel

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