New product lines provide immediate revenue growth and near-term earnings accretion.
Marrone Bio Innovations Inc. (NASDAQ: MBII), a leading developer of bio-based products for pest management and plant health, has acquired from Jet Harvest Solutions all rights and assets to the Jet Ag and Jet Oxide product lines. Jet Ag and Jet Oxide are broad-spectrum products used both for control of fungal and bacterial diseases and as disinfectants.
The transaction builds on a two-year relationship and prior distribution agreement between Jet Harvest and Marrone Bio. Going forward, the portfolio will be sold through Marrone Bio’s existing sales force and distribution network except for the post-harvest business, which has been licensed back to Jet Harvest Solutions.
With gross margins in line with Marrone Bio’s current portfolio of products, the Jet Ag and Jet Oxide product lines are expected to add to the company’s revenues in 2019 and be accretive to earnings within two years. The purchase price for the assets is approximately $2.5 million in cash, plus five yearly earn-out payments based on certain sales. In addition, Marrone Bio engaged the founders of Jet Harvest Solutions for a two-year consulting agreement.
“We continue to expand our portfolio of products for integrated pest management, giving growers more tools to control diseases, improve plant health, and enhance grower return on investment,” said Marrone Bio Chief Executive Officer Dr. Pam Marrone. “The Jet Ag product line delivers the kind of results we demand of our products: Proven performance, capacity for significant revenue growth and attractive gross margins.”
The products-which are used in specialty agricultural and field crops as well as greenhouse and irrigation applications-are expected to be a strong fit with Marrone Bio’s BioUnite strategy. Jet Ag and Jet Oxide also can be used in post-harvest storage fogging, greenhouse surfaces/irrigation systems and agriculture irrigation water and drainage ditches. Jet Ag is one of the leading products in the peroxyacetic acid (PAA) agriculture, turf, ornamentals and post-harvest markets.
“We look forward to continuing our relationship with Jet Harvest, and anticipate both commercial and financial benefits from the addition of Jet Ag to our product portfolio, especially with our Regalia® and Stargus® families of fungicides,” noted Kevin Hammill, chief commercial officer for Marrone Bio. “Jet Ag gives us the opportunity to immediately expand into new markets with a product that has excellent performance and consistency.”
The global fungicide market totals in excess of $16.5 billion (source: markets and markets). The agricultural disinfectant market totals $1.9 billion and is expected to grow to $2.1 billion by 2021 (source: Phillips McDougall).