Business in Brief: Two Medical Marijuana Companies on Way to Tel Aviv Stock Exchange Listing

Histadrut labor federation threatens strike ■ IDB begins process of selling Israir unit ■ Drone maker Aeronautics Limited sees further deterioration in its results ■ Tel Aviv shares extend post-rate rise gains

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FILE Photo: A woman weighs marijuana plants at a laboratory in Israel's second-largest medical cannabis plantation, in the north.
FILE Photo: A woman weighs marijuana plants at a laboratory in Israel's second-largest medical cannabis plantation, in the north. Credit: Jack Guez/AFP

Two medical marijuana companies on way to Tel Aviv Stock Exchange listing

Two medical marijuana companies are due to start trading on the Tel Aviv Stock Exchange by merging with existing public companies rather than in the wake of an initial public offering. Herodium Investments said Tuesday it had signed a memorandum of understanding under which the medical cannabis operations of Panaxia Pharmaceutical Industries will be merged into the company. The all-share deal would leave Panaxia shareholders with 85% of the merged company. In a separate announcement, the TASE-traded shell company Whitesmoke Software said it was buying Better, a grower and supplier of medical marijuana, by allocating 80% of its shares to Better shareholders. Panaxia is unusual among TASE-traded marijuana companies in that it doesn’t grow the plant but makes oils and chewable tablets containing cannabis. Better is one of eight authorized suppliers in Israel of medical marijuana, with a 10,000-square-meter farm serving 5,000 patients. Herodium shares powered higher by 135%% to end at 2.70 shekels (72 cents). Whitesmoke rose 33% to 36 agorot. (Guy Erez)

Histadrut labor federation threatens strike at the Tel Aviv Stock Exchange

Avi Nissenkorn, the chairman of the Histadrut labor federation, threatened Tuesday to call a strike at the Tel Aviv Stock Exchange unless CEO Ittai Ben-Zeev agrees to negotiations with the bourse’s shop committee. “So long as management continues to act irresponsibly and ignore the workers’ representatives, we will have no choice but to act on the labor dispute [that’s been declared] to the point of striking,” Nissenkorn said in a sharply worded letter to Ben-Zeev. Angry that the union declared a labor dispute shortly after signing a contract with TASE management in May 2017, Ben-Zeev has refused to reopen negotiations on their demands, which include a one-time bonus equal to five monthly salaries that would cost the bourse some 50 million shekels ($13.4 million). The demands come at a difficult time for the bourse, which is contending with declining trading activity and stagnant revenues, while wage costs have risen sharply. (Shelly Appelberg)

IDB begins process of selling Israir unit at expected price tag of NIS 225 million

The IDB group has begun shopping its Israir airline subsidiary to potential buyers with the help of investment banks Epsilon and Giza. Controlled by Argentine property magnate Eduardo Elsztain, IDB is counting on the proceeds from the sale to help it pay down debt. Its third-quarter financial report estimated that Israir would fetch 225 million shekels ($60.2 million) and that a deal would be completed by the end of next year. Israir’s strong financial performance should make the sale easier. In contrast to its bigger rival, El Al Airlines, whose profits sagged 15% in the third quarter from a year earlier, Israir boosted its net by one-third, to $15 million, despite higher fuel and wage costs. Revenues rose 11% year on year to $144 million. Israir has benefited from increased seating capacity on its domestic flights to the southern resort town of Eilat and the fact that rival Arkia dropped its Haifa-Eilat route. (Yoram Gabison)

Drone maker Aeronautics Limited sees further deterioration in its results

Aeronautics Limited, the Israeli maker of military drones that is being investigated by police, saw a further deterioration of its financial performance in the third quarter. The company said Tuesday that its operating profit slid into a loss of $3 million, versus a profit of $6.5 million a year earlier, while sales continued to decline, by 24% to $30.5 million. Aeronautics attributed the decline to delays in completing projects on its order books and in signing new contracts. The Defense Ministry froze some of Aeronautics’ export licenses in the wake of allegations that Aeronautics representatives demonstrated a kamikaze drone in Azerbaijan by attacking a manned position of the Armenian army. The company denies the accusations. Police are meanwhile pursuing a criminal investigation as well, and 10 of its top executives face charges including fraud. Aeronautics shares, which have fallen by one-third since the start of the year, ended up 0.7% at 7.40 shekels. ($1.98). (Guy Erez)

Tel Aviv shares extend post-rate rise gains

Tel Aviv shares extended their Monday gains into Tuesday, but lost steam by early morning and closed well off their high for the day. The benchmark TA-35 index close up 0.2% at 1,625.88 points, while the TA-125 added nearly 0.15% to 1,460.89, on turnover of 1.18 billion shekels ($320 million). Gainers in the TA-125 were led by Perrigo, which climbed 3.4% to close at 233.50 shekels. Sapiens gained 3.2% to 42 and Israel Chemicals added 1.9% to 22.57. Teva Pharmaceuticals dropped 2.1% to 80.60. On Tuesday it launched its generic version of Mylan’s EpiPen at the wholesale price of $300, the same price as Mylan’s generic version of the emergency allergy shot. Elco Holdings fell 1.7% to 65.05 after reporting a 24% decline in third quarter net from a year ago to 31.5 million shekels. Other big losers were Super-Sol, which fell 2.7% to 24.13, and Gazit Globe, which lost 2.2% to 29.89. (Shelly Appelberg)

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