Land O’Lakes to acquire Ceres

In California, Land O’Lakes will acquire Ceres for a price of $17.2 million, or $0.40 per share. Land O’Lakes is the largest US grower’s co-operative.

The price per share of common stock represents an 81% premium to the closing price of Ceres shares of common stock on June 16, 2016.

Upon completion of the transaction, Ceres will become a wholly owned subsidiary of Land O’Lakes and will complement Forage Genetics International, 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,” said Chris Policinski, president and CEO, Land O’Lakes, Inc.

“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, chief executive officer and president, Ceres. “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.”

All outstanding shares of Ceres preferred stock will be converted into the right to receive $1,000.00 per share of preferred stock, in cash. Upon the closing of the transaction, holders of certain warrants to purchase shares of Ceres common stock will be entitled to payments of approximately $6.1 million, in the aggregate, pursuant to the terms of the applicable warrant agreements. 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.

Ceres’s repositioning

We reported last summer that Ceres realigned of its business to focus on food and forage opportunities and biotechnology traits for sugarcane and other crops. As part of the realignment, the company restructured its Brazilian seed operations and is exploring discussions with additional local partners and collaborators to support the continued development and commercialization of its technology in Brazil.

Earlier, the Company announced that due to the economic challenges faced by the Brazilian ethanol industry as well as changes in the global energy market, it had expanded the number of market opportunities available for its technology and products and began prioritizing its working capital in additional areas beyond Brazil.

The news came as a surprise to the broader community, since in March 2015 the company had signed a multi-year collaboration agreement Raizen, a joint venture of Royal Dutch Shell and Cosan, to develop and produce sweet sorghum on an industrial scale.

Last month, Ceres announced that the company has received approval to initiate field testing of its biotech sugarcane in the country. The company said that it would test its biomass and sugar yield and stress tolerance traits in several commercial sugarcane cultivars adapted to Brazil’s major production areas. The field evaluations, which were approved by Brazil’s Ministry of Science, Technology and Innovation.

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