Another vertical farming operation revealed its plans to target Nasdaq through SPAC. This week, Florida-based Kalera announced plans to merge with Agrico Acquisition Corp. in a deal that values the agtech company at $375 million. The move comes amid much excitement surrounding the category, although Kalera, which currently lists on the Euronext Growth Oslo exchange, has seen a notable drop in its share price over the past year.
The company’s fall in value is notable as it saw its shares tumble from a 52-week high of $5.99 a share to just $0.91 at the most recent close, according to Google Finance data. (The company intends to delist from its current exchange as part of the transaction, its statement states.)
Why look for a SPAC combination when the company is already listed? The deal would provide financing to the company as it works to increase its current number of farms from four to 10. According to a investor presentation As of December 2021, the company said it was “actively looking at different funding alternatives to satisfy our 2022 funding needs.”
It’s not hard to see why. by the company Third quarter 2021 earnings report, its operations burned $8.7 million in the first nine months of last year, while its investing cash flow was tighter -$110.0 million over the same period. The capital raised of US$61.5 million helped to partially offset these deficits, but Kalera still recorded a net cash change of -US$57.2 million in the first three quarters of 2021. It ended the September quarter with US$ 56.2 million in cash and equivalents – more simply, the company needs more capital to continue expanding as its operations are deep in the red and the company is far from reaching cash flow breakeven, let alone positive net income .
Agrico, the SPAC that Kalera intends to merge with, has “$146.6 million in cash,” he says. This would give Kalera much more time to improve its operating results than its current cash position allows for the company.
A growing market
The deal will likely be seen as an indicator for the health of the growing category. Last year, AeroFarms canceled its own SPAC deal with Spring Valley Acquisition Corp.
“Kalera is already positioned as a leader in the vertical agricultural sector with its 10 facilities in operation or nearing completion and Vindara, its seed business dedicated to controlled environments,” Agrico CEO Brent De Jong said of the deal. “The proposed merger with Agrico positions Kalera to be the first green vertical agricultural company to have a national presence in the US and be able to reliably provide a national purchase agreement while still being local.”
The “national footprint” qualifier is interesting. Certainly several companies, including AeroFarms and Bowery, have enjoyed regional success. Given the localized nature of vertical farming, scaling to the continental United States requires building many farms. After all, a great differential of the category is to serve urban areas where the construction of a standard farm is not viable. Building farms covered in – or close to – these points can sufficiently reduce the emissions that accompany the transport of products from coast to coast.
Kalera currently has operating farms in Orlando, as well as Atlanta and Houston, with additional sites under construction in Denver, Seattle, Honolulu, Columbus and St. Paul. The last two, in particular, are interesting, with the company settling in the Midwest, which is home to much of the country’s traditional agricultural space. Kalera also operates two international farms in Munich and Kuwait, with a third under construction in Singapore.
The companies expect the deal to close in the second quarter of this year. Current interim CEO Curtis McWilliams will continue to lead the company.