Benzinga | Oct 27, 2021 08:54AM EDT

AgriFORCE Growing Systems Announces Binding LOI To Acquire European Agriculture/Horticulture And AgTech Consulting Firm For ~$29M

AgriFORCE Growing Systems Ltd. ("the Company") (NASDAQ:AGRI, AGRIW))))), an IP-focused AgTech company dedicated to advancing sustainable cultivation and crop processing across multiple platforms, has entered into a binding letter of intent to acquire a leading AgTech European consultancy focused on driving agricultural optimization, innovation, solutions and operational expertise in the agriculture and horticulture and Controlled Environment Agriculture (CEA) sectors.



With global operations and over 200 employees, this AgTech consultancy achieved 2020 annual consulting audited revenues of over US$26 million and EBITDA of US$3 million (IFRS based), and it expects to end the year 2021 with revenues of US$28 million (as estimated by the target's management and subject to due diligence) (1).

The binding LOI is subject to completion of standard due diligence and entry into a definitive purchase agreement within 45 days, which shall include commercially standard terms and conditions, including, but not limited to, representations and warranties, covenants, events of default and conditions to closing.

The purchase price by AgriFORCE is estimated to be in the range of US$29 million (1) with a mix of cash and stock, with all stock issued in private placement transactions exempt from registration under Section 4(a)(2) of the Securities Act of 1933.

(1) Based on FX Rate Euro to US$ 2020 1.141357 and 2021 Euro to US$ 1.192735



Transaction Highlights

The AgriFORCE acquisition of this leading European AgTech consultancy is expected to provide the following strategic benefits:

* AgriFORCE plans to leverage the consultancy's decades of experience, established customer base and deep industry relationships to accelerate deployment of its proprietary AgriFORCE Grow House and related IP, including facility and lighting design, automation and artificial intelligence, fertigation and nutrients, as well as micropropagation and genetics.

* The consultancy has generated strong historical financial performance and consistent growth across Europe and internationally. AgriFORCE plans to build on this growth through expansion of these consulting operations and the establishment of a research and development center in North America, higher penetration of its Asian markets, as well as expanding AgriFORCE's operations in Europe,

* This acquisition is intended to place the combined operations at the forefront of knowledge and IP development and research, which AgriFORCE plans to augment with increased revenue from technical solution platforms in the key CEA verticals.

Ingo Mueller, CEO of AgriFORCE Growing Systems, commented: "This acquisition is an alliance of our complementary expertise and shared values. Both AgriFORCE and this leading European AgTech consultancy are dedicated to making positive change in the lives of farmers and consumers. This is an unprecedented opportunity for exceptional innovation and through our synergies, expanded growth in both North America and Europe for both organizations." He added: "We look forward to a robust collaboration around IP development and implementation that will support farmers all around the world in improving all aspects of agriculture -- from seed to table."

Troy McClellan, President of AgriFORCE Solutions, added: "This is a key step for AgriFORCE to drive a strategic integration approach of crops, operations, facilities, systems and environment in the development of IP that improves controlled-environment agriculture (CEA), and field agriculture, including plant yields, nutrition, taste and pureness of quality. Our goal is to address some of the biggest challenges and legacy issues in these key critical sectors and in the continual pursuit of clean, green, better crops and plant-based products and ingredients."