Big Tobacco would be poised to infiltrate the cannabis industry, were Philip Morris to Acquire Israeli Cannabis Tech Firm Syqe
One of the world’s largest tobacco companies, Philip Morris International, is acquiring the Israeli cannabis tech firm Syqe Medical in a deal that could be worth up to $650 million, according to a report by the Israeli business newspaper Calcalist.
The deal, which is still subject to regulatory approval, would mark one of the biggest investments in the cannabis space by a tobacco producer in recent years.
Syqe Medical is known for its innovative product, a metered-dose pharmaceutical-grade inhaler that allows patients to measure an exact dose of medical cannabis. The inhaler is currently available in Israel and Australia, and has been approved in Canada as only the fourth medical device for a cannabinoid vaporizer. However, it has not yet reached the Canadian market.
The inhaler is reported to have taken eight years and $83 million to develop, and Syqe holds approximately 120 patents related to its technology.
The deal would give Philip Morris access to Syqe’s expertise and intellectual property in the medical cannabis tech space, which could help the tobacco giant tap into the vaped medical cannabis market, which is estimated to be worth $22 billion in the next 10 to 15 years.
According to Owen Bennett, a cannabis and tobacco equity analyst for New York-based investment bank Jefferies Group, the $650 million valuation would make Syqe the seventh most valuable cannabis company in the world. Bennett wrote on Tuesday that there is a significant opportunity in cannabis, spanning wellness and healthcare.
Philip Morris is not new to the medical cannabis tech space. The company previously invested $20 million in Syqe Medical when it was a startup.
Philip Morris’ move to buy Syqe Medical comes two years after the New York-based cigarette maker told Bloomberg News it was analyzing the marijuana industry for market opportunities.
At the time, then-CEO Andre Calantzopoulos said that the company was doing all this work and would determine one day what avenues to pursue. But he also said that the company’s priority was what it was doing with its smoke-free products, and that’s where he would stay on cannabis.
Calantzopoulos is now executive chairman of Philip Morris.
Both Syqe Medical and Philip Morris declined to comment on the deal.
According to Calcalist, the pending deal consists of milestones. Philip Morris is investing $120 million upfront in Syqe. If the Israeli company obtains approval from the U.S. Food and Drug Administration for its inhaler following clinical trials, Philip Morris would purchase the Syqe shares it doesn’t already own, bringing the total price to $650 million.
The deal would be one of the largest acquisitions of an Israeli company by a foreign company in recent years. It would also be one of the most significant deals in the cannabis industry, which has seen a wave of consolidation and investment amid growing legalization and acceptance of cannabis around the world.