Land O'Lakes Inc. and Ceres Inc. announced June 17 that they have signed a definitive merger agreement under which Land O'Lakes will acquire all of the outstanding capital stock of Ceres in a transaction valued at approximately $17.2 million (including amounts payable to holders of certain warrants to acquire Ceres common stock).
Under the terms of the merger agreement, Land O’Lakes (through its wholly owned subsidiary, Roman Merger Sub Inc.) will commence a tender offer for all outstanding shares of Ceres common stock for 40 cents per share, in cash. The price per share of common stock represents an 81% premium to the closing price of Ceres shares of common stock on June 16.
Upon completion of the transaction, Ceres will become a wholly owned subsidiary of Land O’Lakes and will complement Forage Genetics International (FGI), a Land O’Lakes subsidiary, and bring new advanced plant breeding and biotechnology to FGI’s research and development pipeline.
“Through our Forage Genetics International business, Land O’Lakes is interested in providing a holistic forage offering to our customers, including alfalfa, corn silage and forage sorghum. The acquisition brings complementary strengths together, adds new advanced plant breeding and biotechnology to the FGI research and development pipeline and accelerates the process of bringing new forage solutions to existing and new markets,” Land O'Lakes president and chief executive officer Chris Policinski said.
“Our shift away from bioenergy and Brazil and into forages has been highly successful to date, and is culminating now in this proposed merger transaction with a preeminent leader in forage crops,” said Richard Hamilton, Ceres CEO and president. “After evaluating strategic options, our board of directors has unanimously determined that this all-cash transaction, which represents a significant premium from recent trading levels, is in the best interest of the company and its stockholders, and will advance Ceres’ mission of making the production of meat and dairy more scalable and sustainable.”
Each of Ceres’ directors and certain of Ceres’ officers, who collectively beneficially own shares representing approximately 1.16% of Ceres’ outstanding common stock, have entered into tender and support agreements with Land O’Lakes to tender their shares of Ceres common stock to the offer.
The transaction, which has been approved by the Land O'Lakes board of directors and unanimously approved by the Ceres board of directors, is expected to close in the third calendar quarter of 2016. Land O’Lakes will fund the transaction with cash on hand. The transaction is not subject to any financing contingency.
Land O'Lakes, one of America's premier agribusiness and food companies, is a member-owned cooperative with industry-leading operations that span the spectrum from agricultural production to consumer foods. With 2015 annual sales of $13 billion, Land O'Lakes is one of the nation's largest cooperatives.
Ceres is an agricultural biotechnology company that develops and markets seeds and traits to produce crops for animal feed, sugar and other markets. The company’s advanced plant breeding and biotechnology platforms, which can increase crop productivity, improve quality, reduce crop inputs and improve cultivation on marginal land, have broad application across multiple crops, including food, feed, fiber and fuel crops. Ceres markets its seed products under its Blade brand. The company also licenses its biotech traits and technology to other life science companies and organizations.