Land O' Lakes acquires Ag biotech developer Ceres

Land O' Lakes, Inc. and Ceres, Inc. announced recently that they have signed a definitive merger agreement under which Land O'Lakes will acquire all of the outstanding capital stock of Ceres in a transaction valued at approximately $17.2 million (including amounts payable to holders of certain warrants to acquire Ceres common stock).

Under the terms of the merger agreement, Land O'Lakes (through its wholly owned subsidiary, Roman Merger Sub, Inc.) will commence a tender offer for all outstanding shares of Ceres common stock for $0.40 per share, in cash. 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 (FGI), 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."

Each of Ceres' directors and certain of Ceres' officers, who collectively beneficially own shares representing approximately 1.16% of Ceres' outstanding common stock, have entered into tender and support agreements with Land O'Lakes to tender their shares of Ceres common stock to the offer.

Under the terms of the merger agreement, following the successful completion of the tender offer, the transaction will be completed by a second-step merger in which all outstanding shares of Ceres common stock not tendered in the tender offer will be converted into the right to receive $0.40 per share of common stock, in cash, and 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.

Closing of the tender offer and merger is subject to certain customary conditions, including the tender in the tender offer of more than 50 percent of all outstanding shares of Ceres common stock. The transaction is also subject to other customary closing conditions.

For further information regarding certain terms and conditions contained in the definitive merger agreement, please see Ceres' Current Report on Form 8-K, which will be filed in connection with this transaction.