The CEOs of Agrify Corp. and Nature’s Miracle went from confidence in the need for consolidation in the cannabis industry to a mutual agreement to terminate their planned merger “given unfavorable market conditions” in the matter of four days.
Michigan-based Agrify, a provider of cultivation and extraction solutions for the cannabis industry, and California-based Nature's Miracle Holding Inc., a vertical farming technology and infrastructure provider, announced a signed definitive merger agreement on May 16, with Agrify surviving the planned merger as a wholly owned subsidiary of Nature's Miracle.
The planned transaction was anticipated to close in the latter half of 2024 with Agrify shareholders collectively owning approximately 30% of the post-merger common stock of the combined companies, according to a May 16 press release from the companies. The consolidated company was supposed to focus on indoor vertical farming supported by a prominent cannabis extraction division.
At that time, Nature’s Miracle CEO James Li said, “We are confident that the ‘one’ Nature's Miracle and Agrify business will result in significant market share growth,” and Agrify CEO and Board Chairman Raymond Chang said, “We believe the cannabis industry needs consolidation.”
But the head executives took a 180-degree U-turn in issuing separate press releases to announce the mutual termination of the planned merger on May 20, with both releases stating “unfavorable market conditions” as the reason behind the decision. The companies also terminated a debt purchase agreement with the entities controlled by Agrify’s Chang.
“Agrify continues to see strong momentum and pipeline growth quarter-over-quarter in both cultivation and extraction business divisions,” Chang said in Agrify’s May 20 release. “We believe that it is in Agrify’s best interest to stay the course and continue to execute. Agrify’s management team and board are committed to continuing to explore all strategic options in order to create the highest shareholder value.”
In Nature’s Miracle press release, Li said, “Based on the current unfavorable market conditions, we’ve determined this is in the best interest of our shareholders and the long-term value of our business. At Nature's Miracle, we will continue to focus on our core indoor growing products, including grow light, dehumidifier and container growing systems, where we are seeing strong momentum. We extend our appreciation to the Agrify team for their cooperation.”
