Plant Response, an industry consolidator of leading biological-based solutions, recovered waste fertilizers and other crop input technologies, has been acquired by The Mosaic Company, a global manufacturer of agricultural fertilizers and chemicals. Cascadia Capital, an investment bank serving the AgTech sector, acted as the exclusive financial advisor to Plant Response.
Plant Response brings together a diverse portfolio of biological-based crop inputs and technologies, having recently consolidated Koch Biological Solutions (2019), Pathway BioLogic (2020), and WISErg (2021). With 16 commercialized products, Plant Response aims to enhance grower returns by improving nutrient use and efficiency, improve disease defense, biocontrol, tolerance to abiotic stress and increase overall crop yields.
Plant Response was backed by leading food and agriculture investors and strategics, including Alexandria Venture Investments, Koch Agronomic Holdings, Laird Norton Company, iSelect Fund, Second Avenue Partners, Middleland Capital, Yara, Novozymes, and Leaps by Bayer, among others.
The Mosaic Company is a Fortune 500 company based in Tampa, Florida and the largest U.S. producer of potash and phosphate fertilizer. The company employs more than 13,000 people in six countries to serve farmers all over the world.
“Plant Response received meaningful interest from both strategic and institutional acquirers,” noted Scott Porter, Cascadia Capital Managing Director and head of AgTech. “We continue to see increased demand for biologic-based crop solutions from market participants and believe acquisitions in this space will accelerate in the near-term as large strategics seek to augment their conventional crop offerings.”
Plant Response represents Mosaic’s first acquisition in over 5-years, beginning a reprioritization of the company’s M&A strategy. According to Cascadia, acquisitions in the AgTech sector are expected to increase in part due to strong financial performance of potential strategic acquirors. Major diversified agriculture strategics have experienced multiple years of increasing performance due in part to a favorable commodity pricing environment. The same can be said for The Mosaic Company, which has seen annual revenue grow to an estimated $12.4 billion as of December 31st, 2021, representing a 42.3% increase since 2020.
As a result of strong operating performance, free cash flow available for investment and acquisitions for public company strategics is at a 7-year high. In the case of The Mosaic Company, accumulated cash increased in the last twelve months from $574 million in 2020 to $843 million in 2021.
Due to record earnings and cash accumulations, Cascadia expects large agriculture strategics to be especially active in 2022. “In particular, we are seeing strategics leverage increased share prices and cash positions into renewed M&A efforts,” said Mr. Porter. “Importantly, many strategics are acting as industry consolidators, seeking to leverage their market reach and combine nascent technologies that have been unable to scale as standalone companies. What TELUS, Semios, AGCO, and Deere & Company are doing is a good example of platform consolidators driving M&A in the category.”
In conjunction with elevated acquisition appetite, Cascadia anticipates more AgTech companies will be looking to sell in 2022, further accelerating M&A activity. Since 2020 the amount of reported global venture capital investment into AgTech has increased from $6.3 billion to $9.2 billion in 2021. “The AgTech landscape is maturing as the first large wave of venture capital investment is nearing the end of their original investment horizons,” said Mr. Porter. “Additionally, poor public market and SPAC performance will drive investors to increasingly choose M&A as an option for liquidity.”
Technology stocks broadly, and particularly AgTech, struggled in the last year as demonstrated by declining share prices for leading names in the sector such as Gingko Bioworks, Marrone Bio, Zymergen, Benson Hill, Farmers Edge, and AppHarvest to name a few.
Cascadia is a leading investment bank for companies in the AgTech sector. Recent transactions include the Series D equity investment in AgBiome led by Blue Horizon and Novalis Life Sciences, acquisition of Conservis Corporation by TELUS Agriculture and Rabobank, and the acquisition of Cytozyme Laboratories by Verdesian Life Sciences.