Bioceres Crop Solutions Corp. Form 6-K Summary
Business context and reporting period
Bioceres Crop Solutions Corp. filed this Form 6-K on November 12, 2020, for the month of November 2020. The filing announces definitive agreements to acquire Arcadia Biosciences’ remaining 50% ownership interest in Verdeca LLC and strategic intellectual property assets relating to soybean and wheat.
Transaction and key financial terms
- Bioceres will acquire full ownership and control of Verdeca, including the HB4 Soy technology and Verdeca’s soybean gene-editing library.
- At closing, consideration consists of $5 million in cash and $15 million in equity, represented by 1,875,000 Bioceres common shares issued at $8 per share.
- The shares are subject to a six-month lock-up; one-third are pledged to Bioceres pending third-party clearances for certain wheat rights.
- Additional consideration includes $2 million contingent on Chinese import clearance for HB4 Soy or specified planted-hectare penetration, plus a $1 million reimbursement of transaction-related costs due after closing.
- Bioceres will pay royalties of 6% of net HB4 Soy technology revenue, capped at $10 million in aggregate, and 25% of net revenue from the in-licensed wheat technology.
- The filing does not provide revenue, profit, cash flow, margin, debt, liquidity, or other operating metrics for the reporting period.
Material changes versus the prior comparable period
The transaction changes Bioceres’ position from joint owner to full owner of Verdeca and HB4 Soy. Management expects full ownership to increase its share of future HB4 Soy economics and enable additional breeding collaborations and commercialization partnerships. Bioceres also obtained control of Arcadia’s applicable soybean technologies and rights to quality wheat traits and the Good Wheat brand in Latin America.
Outlook, commentary, risks, and unusual items
- The acquired wheat portfolio includes genome-edited materials intended to produce flour with 65% less gluten, ten times the dietary fiber content of conventional wheat flour, and improved oxidative stability.
- Some acquired rights remain subject to third-party clearances, creating a condition to release one-third of the pledged shares and potentially affecting the acquired wheat rights.
- Commercialization of HB4 Soy remains dependent in part on regulatory clearance, including Chinese import clearance, and on achieving specified market penetration.
- The filing contains forward-looking statements regarding commercialization, partnerships, COVID-19 impacts, employee safety, business continuity, farming-community conditions, inventory ramp-up, liquidity, and financial results.
- Risks include COVID-19-related disruption, regulatory and third-party approvals, market adoption, operational execution, and the possibility that actual results differ materially from management’s expectations.
Investor verification points
- Verify the closing date and whether all third-party clearances for the wheat rights were obtained.
- Confirm issuance, lock-up, and pledge arrangements for the 1,875,000 Bioceres shares.
- Monitor Chinese import clearance for HB4 Soy and the conditions governing the additional $2 million payment.
- Assess future HB4 Soy and wheat revenue, royalty obligations, and the remaining aggregate royalty cap.
- Review the company’s Fiscal First Quarter 2021 earnings materials for additional transaction details and updated operating, liquidity, and financial information.