Marrone Bio Innovations (MBII) Stock: Why The Price Surged Today

By Amit Chowdhry ● Mar 17, 2022
  • The stock price of Marrone Bio Innovations Inc (NASDAQ: MBII) increased by over 28% pre-market today. This is why.

The stock price of Marrone Bio Innovations Inc (NASDAQ: MBII) increased by over 28% pre-market today. Investors are responding positively to Bioceres Crop Solutions Corp. (NASDAQ: BIOX) and Marrone Bio Innovations (MBI) announcing that they have entered into a definitive agreement to combine the companies in an all-stock transaction. 

Under the terms of the deal, which has been unanimously approved by the Board of Directors of both companies, each share of MBI common stock will be exchanged at closing for ordinary shares of Bioceres at a fixed ratio of 0.088, representing a value of approximately $236 million, based on the Bioceres and MBI share prices at market close on March 15, 2022, and the number of current outstanding MBI shares.

This transaction is going to combine Bioceres’ expertise in bionutrition and seed care products with MBI’s leadership in the development of biological crop protection and plant health solutions, creating a global leader in the development and commercialization of sustainable agricultural solutions. And the companies together operate in 46 countries with approximately 640 employees, including two wholly-owned manufacturing facilities and research and development (R&D) facilities located in Davis, California, and Rosario, Argentina.

The combined company is going to have a diverse customer base, product portfolio, and geographic reach across a wide range of crops positioned to serve the massive market opportunity emerging from the bio-reduction and replacement of chemical ag inputs. And the key products in the combined companies’ R&D pipelines include Bioceres’ HB4 drought tolerance program in wheat and soybeans and MBI’s breakthrough research in bioherbicides. Plus MBI recently submitted regulatory packages for its novel bioinsecticide/bionematicide products MBI-306 and MBI-206 to the U.S. Environmental Protection Agency and Brazilian authorities for approval, respectively.

The deal is expected to close in the third quarter of calendar 2022, subject to the approval of MBI shareholders, regulatory clearance, and other customary closing conditions. Shareholders representing approximately 49% of MBI’s outstanding shares of common stock have entered into customary transaction support agreements, agreeing to vote their shares in favor of the merger agreement and transactions contemplated thereby. And upon close, MBI shareholders will own approximately 16 million shares of Bioceres, with at least two individuals designated by MBI to be appointed to Bioceres’ board of directors.

In connection with the transaction, Bioceres has agreed to terms for a capital commitment with a principal amount between $37.5 million and $45 million in the form of a convertible loan. And the loan will mature four years after closing and accrue interest at an annual rate of 9%, of which 5% will be payable in cash and 4% in-kind. At any time up to maturity, the lenders will have the option to convert the loan into common shares of Bioceres at a strike price of $18 per share. Bioceres will have the option for a voluntary prepayment beginning 30 months after the date on which the loan has been effected.

Bioceres has also entered into an agreement with holders of a convertible note with an outstanding principal amount of $49.1 million that matures in March 2023. Under such agreement, and pursuant to the terms of the convertible note, the holders of the convertible note have committed to converting 75% of the outstanding principal amount into shares of common stock of Bioceres. And the remaining 25% of the principal amount outstanding will be rolled into a new loan facility with a maturity of 4 years and no rights to convert into equity.

Under the proposed terms, the closing of the conversion of the existing convertible notes and closing of the related new term loan is expected to occur within six weeks, and the closing of the new convertible loan is conditioned on and will occur simultaneously with the closing of the transaction.

The terms of the conversion, new term loan, and new convertible loan described above are subject to negotiation and execution of customary definitive documentation.

KEY QUOTES:

“We are very excited about the value creation that will result from this combination for customers, employees, and investors. 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.”

“MBI’s commercial footprint in North America and Europe will strongly complement our existing efforts in these geographies, while Bioceres’ leadership in Latin America will provide an excellent channel for MBI’s portfolio in these important row-crop markets. Together, we will create a winning platform in one of the most dynamic segments of agriculture.”

— Bioceres Chief Executive Officer Federico Trucco

“Our merger has the potential to accelerate global reach, broaden our product offerings and expand our R&D programs. Consumer and grower demand is accelerating for agricultural products that help produce safe, affordable food in a sustainable manner. We will be able to further serve that market opportunity and provide our distribution partners and our growers with greater returns on investment.” Helash noted that the merger is anticipated to generate $8 million in annual cost synergies, the majority of which relate to the elimination of duplicative public company expenses and consulting fees.”

“MBI and Bioceres have a shared culture of innovation and entrepreneurial spirit. With complementary R&D capabilities, the combination unlocks many additional possibilities for further groundbreaking commercial solutions.” 

— Kevin Helash, Chief Executive Officer of Marrone Bio

“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. Rizobacter had the team, the products, the industrial capabilities and strong customer relationships needed to materialize growth, and we partnered with their leadership to unlock the opportunity.” 

— Enrique Lopez Lecube, Bioceres’ CFO

“Concurrent with Rizobacter’s acquisition, Bioceres negotiated a $45 million long-term loan, today fully repaid, that brought in the financial resources to execute on our ambitious plans. Similarly, today we are announcing that in connection with the merger, we have agreed to terms for up to $45 million in long-term committed capital in the form of a convertible loan. In addition to each company’s existing cash position, we estimate that pro forma cash will be around $100 million. Finally, we are also announcing the conversion to equity of 75% of the 2023 convertible loan, with the other 25% restructured into a new 4-year loan.” 

— Lopez Lecube

“We are excited that the scale created by this combination with Bioceres can accelerate and expand the commercialization of Marrone’s existing products. The combined companies will have the quality, experience, and depth of management as well as the financial resources to realize the full potential of Marrone’s pipeline.” 

— Dwight Anderson, Managing Partner at Ospraie Ag Science LLC, the largest shareholder of MBI

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.