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Bioceres Agrees to Merge with Marrone
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Bioceres Agrees to Merge with Marrone

In a major move, crop productivity solutions provider Bioceres Crop Solutions Corp. (BIOX) has agreed to merge with Marrone Bio Innovations (MBI) in an all-stock deal. The deal, approved by the Boards of both companies, creates a global leader in developing and commercializing sustainable agricultural solutions.

Under the terms, based on closing share prices on March 15, each MBI share will be exchanged at a ratio of 0.088 with Bioceres shares indicating a value of ~$236 million.

Notably, the transaction brings together Bioceres’ bionutrition and seed care products expertise with MBI’s expertise in biological crop protection and plant health solutions. The two companies have a combined footprint in 46 countries.

Management Weighs In

CEO of Bioceres, Federico Trucco, commented, “By combining our current commercialized products and pipelines, we will be in a position to serve all major agriculture input categories with low environmental impact, highly efficacious, biological-based solutions.”

CFO of Bioceres, Enrique Lopez Lecube, stated, “Bioceres has a proven track record in successfully integrating and scaling up businesses that have cultures focused on the commercialization of innovation. Since we integrated Rizobacter just over five years ago, revenue almost tripled and margins have expanded, driving  ~4x increase in EBITDA.”

Significantly, the transaction is expected to generate $8 million in annual cost synergies, primarily by eliminating duplicative public company expenses and consulting fees. Additionally, Bioceres has also announced the conversion of 75% of its 2023 convertible loan into equity and the remaining 25% loan is being restructured into a 4-year loan.

Combined R&D Pipeline

Notably, products in the combined entity’s pipeline include the HB4 drought tolerance program in wheat and soybeans (Bioceres), and research in bioherbicides (MBI). Moreover, MBI recently submitted regulatory packages for its novel bioinsecticide/bionematicide products (MBI-306 and MBI-206) for approval in the U.S.

The deal is expected to close in Q3 of the calendar year 2022. Upon closing, MBI investors will own ~16 million Bioceres shares.

Analysts’ Take

Recently, Lake Street analyst Ben Klieve reiterated a Buy rating on Bioceres alongside a price target of $25, implying a potential upside of 68.1%.

Valuation Speaks

Let us consider some of the key metrics for Bioceres and how it fares against the broader industry. Bioceres has an earnings before interest and taxes (EBIT) margin of 16.2%, which is better than the industry median of 14%.

Meanwhile, Bioceres generates $9.65 thousand in net income per employee whereas the median industry figure is $42.9 thousand, indicating Bioceres’ scope to better utilize its workforce.

Further, the forward EV/EBITDA multiple for Bioceres is at 12.48 while the median figure for the industry is 7.64, indicating the stock is on the expensive side compared to its peers. Shares are up 18.6% over the past month.

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