Ancillary Cannabis Co.'s Stock Surges On News Of Merger With California Provider Of CEA Products And Solution

Benzinga ·  Apr 17 22:16

Nature's Miracle Holding Inc. (NASDAQ:NMHI) has entered into a term sheet to acquire 100% of all the outstanding shares of Agrify Corporation (NASDAQ:AGFY).

What Happened

The California-based agriculture tech company that provides equipment and services to the industry said on Wednesday that it would issue shares of its common stock to acquire Agrify.

Under the agreement, each Agrify shareholder would receive roughly 0.45 of a share of Nature's Miracle common stock for each share of Agrify common stock.

Agrify's equity is valued at $6.35 million or $0.4185 per share. Upon closing the merger, Raymond Chang, Agrify's CEO and board chair agreed to assume the role of president of the Agrify division of Nature's Miracle and will join the board of Nature's Miracle.

Nature's Miracle agreed to purchase roughly $750,000 of horticultural LED lighting goods from Agrify before the closing of the acquisition.

Additionally, the company said it will purchase all of Agrify's outstanding indebtedness from the entities with a combination of cash and Nature's Miracle stock.

Why It Matters

The deal is expected to bring a meaningful revenue stream for Nature's Miracle through Agrify's powerful SaaS and AI technology, which can be applied to the former's vertical farming business, the company said. Agrify also has a significant market share in cannabis extraction as it continues to drive revenue growth.

"We believe that Agrify will not only provide meaningful revenue with their cannabis extraction business, but the combined business will benefit through efficiencies with the consolidation of our advanced lighting technology and their industry-leading Software as a service model and vertical farming unit technology," James Li, CEO of Nature's Miracle, said.

Agrify will benefit from the expertise and strong operators that comprise Nature's Miracle management team, as well as its prominent market position providing advanced horticultural and cultivation lighting technologies for agricultural vertical farming.

"We believe the indoor growing industry is in need of a major consolidation and we are glad to have the opportunity to team up with one of the most impressive and experienced teams in the industry," Chang said.

What's Next

The transaction is expected to close within six months of this announcement, subject to completion of mutual due diligence, shareholder approval and customary closing conditions.

Agrify's shares traded 41.0816% higher at $0.4200 per share at the time of writing on Wednesday morning.

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