AgriFORCE Growing Systems Ltd AGRI, an intellectual property (IP)-focused AgTech company, agreed to amend the merger agreement with Delphy Groep BV, a Netherlands-based AgTech consultancy firm.
What Happened? AGRI entered into a definitive agreement in February to acquire Delphy for $29 million through a combination of cash and stock. This definitive agreement follows the binding LOI as previously announced in October 2021.
As per the amendment, the parties agreed to mutually extend the closing date to allow sufficient time to complete Form 14A for shareholder approval.
The transaction will likely complete in the current calendar year, subject to AgriFORCE shareholder approval.
In addition, the amendment will reduce the total purchase price from $29 million to $17.66 million, plus a potential earnout of up to $5.99 million over two years, based on achieving future performance milestones.
AgriFORCE CEO Ingo Mueller commented, "Due to the size of this planned transaction and the necessary adjustments to convert from Dutch GAAP to US GAAP where certain Government contract work is classified differently, the audit took longer than expected; however, Delphy has completed their audit, and we are now looking to close the acquisition before year-end, subject to timely shareholder approval."
Why Does It Matter? The planned reduction in upfront purchase price plus addition of earnout reflect confidence in the outlook and further alignment of interests.
"Additionally, the reduction in the planned purchase price with the addition of an earnout component reflects the further alignment of our interests and our mutual confidence in the outlook for the business. Importantly, we believe this accretive acquisition will significantly transform our business and help catapult AgriFORCE onto the global stage. Importantly, we believe this accretive acquisition will significantly transform our business and help catapult AgriFORCE onto the global stage," Mueller added.
Price Action: AGRI shares closed lower by 1.35% at $1.46 on Friday.
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