Adam JacksonNature’s Miracle Holding Inc. (NASDAQ: NMHI) and Agrify Corporation (Nasdaq: AGFY) are merging in an all-stock deal that will see the California-based indoor farming tech company acquire its smaller, cash-strapped rival at an equity valuation of around $6.4 million.
Under the terms of the definitive merger agreement announced Thursday, Nature’s Miracle will issue roughly 6.8 million of its common shares to Agrify shareholders, with each Agrify investor receiving 0.45 Nature’s Miracle shares for every Agrify share they own. That exchange ratio values Agrify’s equity at approximately $6.4 million based on Nature’s Miracle’s current stock price.
When the transaction closes, expected later this year, Agrify will become a wholly-owned subsidiary under Nature’s Miracle’s corporate umbrella. The combination unites Nature’s Miracle’s offerings like horticultural lighting and irrigation systems for indoor farming with Agrify’s vertical cultivation units and cannabis extraction solutions.
For Massachusetts-based Agrify, the buyout could provide a lifeline as it works to turn around financial struggles. In its latest annual report, Agrify disclosed an accumulated deficit of around $265.8 million at the end of 2023 and expressed substantial doubt about its ability to continue as a going concern without raising additional capital.
Despite its woes, Agrify seems relieved to join forces with Nature’s Miracle.
James Li, the CEO of Nature’s Miracle, touted the “synergies” and “cross-sell opportunities” created by bringing together the two companies’ product portfolios and international manufacturing capabilities. Raymond Chang, Agrify’s CEO, expressed excitement about advancing the firm’s “innovative” and “disruptive” agriculture and cannabis technologies under one larger corporate umbrella. Per the April term sheet, Chang will assume the role of president of the Agrify division within Nature’s Miracle after the deal closes.
The deal follows an initial non-binding term sheet the companies unveiled in April outlining the proposed stock-for-stock merger terms. Thursday’s announcement confirms the two have now signed a definitive agreement to complete the combination.
Once finalized, current Agrify shareholders will own around 30% of the combined company’s outstanding stock, with Nature’s Miracle investors holding the remaining 70% majority. The deal still needs approval from Agrify shareholders, which is expected in the second half of 2024 if it clears remaining closing conditions.
Nature’s Miracle currently carries a market capitalization of around $22 million.
