Another vertical farming company revealed ambitions to list on the Nasdaq through SPAC. Kalera, located in Florida, announced a plan to combine with Agrico Acquisition Corp. this week, in a $375 million deal. The step comes at a time when there is a lot of buzz about the category, though Kalera, which is currently listed on the Euronext Growth Oslo exchange, has seen a significant drop in the stock price in the last year.
According to Google Finance data, the company's stock has fallen from a 52-week high of $5.99 per share to just $0.91 per share as of its latest close.
When a firm has already gone public, why pursue a SPAC partnership? The agreement would offer to fund to the company as it attempts to expand its current farm count from four to ten. The firm was "actively seeking multiple funding possibilities to cover its financial requirements for 2022," according to an investor presentation dated December 2021.
It's easy to understand why. According to the company's Q3 2021 earnings report, the company's operations burned $8.7 million in the first nine months of last year, while its investing cash flow was much lower -$110.0 million. Kalera still had a net cash change of -$57.2 million in the first three quarters of 2021, despite raising $61.5 million in capital to help partially offset those deficits. It had $56.2 million in cash and equivalents at the end of the September quarter — to put it another way, the company needs more capital to keep expanding because its operations are deeply in the red and it is still a long way from cash flow break-even point, let alone positive net income.
A Growing Market of Vertical Farming
The deal will almost certainly be viewed as a barometer for the health of burgeoning health. AeroFarms' SPAC deal with Spring Valley Acquisition Corp. was called off last year when the latter said the deal was "not in the better interests of our shareholders."
"With its 10 facilities functioning or under development and Vindara, its seed company specialized to controlled conditions, Kalera is already positioned as a leader in the vertical farming market," Agrico CEO Brent De Jong said of the transaction. "With the planned merger with Agrico, Kalera will become the first leafy green vertical farm firm in the United States to have a national presence and be able to dependably serve a national off-take contract while remaining local."
The term "national footprint" is an intriguing one. Several companies, like AeroFarms and Bowery, have achieved success in the region. Due to the limited character of vertical farming, expanding throughout the continental United States necessitates the construction of a large number of farms. After all, one of the category's main selling points is that it can serve urban areas where a traditional farm isn't feasible. Building indoor farms in – or near – these locations can significantly minimize the emissions associated with moving products across the country.
Kalera now operates farms in Orlando, Atlanta, and Houston, with more facilities in Denver, Seattle, Honolulu, Columbus, and St. Paul under construction. The latter two are particularly intriguing, with the company establishing facilities in the Midwest, which houses much of traditional farmland. Kalera also has overseas farms in Munich and Kuwait, with a third in Singapore under construction.
The purchase is expected to finalize in the second quarter of this year, according to the firms. If you want to start vertical farming, you can refer to our website for all costs and benefits.
