Merger of Nature’s Miracle, cannabis tech firm Agrify collapses

“(U]nfavorable market conditions” led to the cancellation of a merger between cannabis technology provider Agrify Corp. and controlled-environment ag-tech firm Nature’s Miracle, according to a Monday announcement.

The deal, announced in April, was for an undisclosed amount but valued the equity of publicly traded Agrify at $6.3 million.

Stocks drop after news

Shares of Agrify (AGFY) tumbled nearly 15% during Monday trading on the Nasdaq exchange, from 33 cents per share at the opening to 28 cents by midday.

Nature’s Miracle shares (NMHI) fell more than 20% during Monday trading on the Nasdaq, from 74 cents in the morning to just under 54 cents.

Under terms of the original “major consolidation” deal, Nature’s Miracle was to purchase $750,000 of LED lighting equipment from Agrify and assume the Troy, Michigan-headquartered company’s debt owned by businesses controlled by Agrify CEO Raymond Chang for an unspecified amount of cash and stock.

Chang was to become president of a new Agrify division of Nature’s Miracle and sit on the combined company’s board.

Upland, California-based Nature’s Miracle would then have issued 0.45 common shares to Agrify shareholders for each Agrify share, according to the terms of the initial deal.

Agrify admits struggles

The announced merger followed an earnings call in which Agrify reported an annual net loss of $18.7 million.

In its annual 10-K report, Agrify noted “substantial doubt about our ability to continue as a going concern.”

However, in announcing the canceled merger, Chang said Agrify “continues to see strong momentum and pipeline growth quarter after quarter in both cultivation and extraction business divisions.”

“We believe that it is in Agrify’s best interest to stay the course and continue to execute,” he added.