Welcome!

News Feed Item

S&W Seed Company To Acquire Seed Genetics International

Acquisition creates the largest non-dormant alfalfa seed company in the world

FIVE POINTS, Calif., March 17, 2013 /PRNewswire/ -- S&W Seed Company (Nasdaq: SANW) today announced that it has agreed to purchase 100% of Seed Genetics International Pty Ltd ("SGI"), subject to due diligence and other customary conditions.  The combination of S&W with Adelaide, Australia-based SGI will create the world 's largest non-dormant alfalfa seed company. The transaction, which is valued at approximately $16 million, is scheduled to close in early April 2013 and is expected to be immediately accretive to S&W's earnings.

Mark Grewal, president and chief executive officer of S&W Seed Company, commented, "This pact creates a powerhouse that will be unrivaled in its ability to breed and produce non-dormant alfalfa seed all year round. SGI has a tremendous base of contracted growers, very strong customer relationships, and unique genetics. The sales channels that S&W and SGI sell into are highly complementary, with very little overlap in customers. This move considerably strengthens our reach into Argentina and the rest of Latin America."

Grewal added, "I also want to stress the 'people factor.' S&W is gaining a highly competitive team of veteran seedsmen whom we know well and highly respect.  We look forward to collaboration with them in all areas. By putting growers first, SGI's breeding program, initiated by Dr. Ross Downes and now continued by David Pengelly, has created grower-focused varieties that produce more seed per acre for the seed farmer than any other varieties in Australia, adding to seed farmer profits and potentially lowering cost of seed for S&W. We have the opportunity to merge David's work with that of S&W's own VP of Genetics and Breeding, Dan Gardner and our emeritus breeder, Bob Sheesley, who himself did pioneering work in salt tolerance and seed yield."

S&W is paying a purchase price of approximately $16 million, over half of which consists of 865,000 shares S&W Common Stock and will result in SGI's owners becoming significant shareholders of S&W. The remaining consideration consists of $5 million in cash and $3 million in the form of a three-year promissory note. Based on unaudited information, SGI had revenues of approximately AUD $18 million for the fiscal year ended June 30, 2012 and had pre-tax income of $1.6 million. SGI's assets consist primarily of accounts receivable, inventory, a tenured grower base and intellectual property, such as genetics. S&W intends to file audited financial results of SGI no later than 74 days from closing, in compliance with SEC guidelines.

SGI controls approximately 17,000 acres of irrigated alfalfa seed production under contract, and has first call on another 12,000 acres of non-irrigated land that is rain dependent and has intermittent production. Australian seed yields per acre, even on irrigated fields, typically are materially lower than S&W's California yields and production costs are also materially lower. In 2013, SGI contracted for alfalfa seed production with approximately 140 contract farmers in Southern Australia, all for SGI's proprietary varieties. In fiscal 2012, SGI's growers produced approximately 5.5 million pounds, concluding a growing season that suffered from the impact of highly adverse weather conditions. The 2013 harvest is currently ongoing, but based on initial estimates, SGI management is estimating that it will have approximately 8 million pounds of alfalfa seed available for sale when the harvest concludes in late April 2013. Actual production could vary materially in either direction from estimates, due to unforeseen weather events and other factors.  

SGI sells into international markets, including the Middle East and Africa (MENA), South America, and Southern Europe with the majority of the company's sales concentrated in the April through September time frame.

SGI was founded in 2002, with the goal of commercializing a seed breeding breakthrough by Dr. Ross Downes. Working with alfalfa in the mid 1990's, Dr. Downes had identified a particular trait that resulted in dramatically increased seed yields, even with less than optimum pollinator activity. The intellectual property stemming from Dr. Downes' pioneering work, which has been protected under international law and the Australian Plant Breeders Rights Act, became the cornerstone for over a decade of development by SGI's  David Pengelly. SGI has developed well known proprietary varieties, such as SuperSonic, SuperNova, SuperStar, SuperCharge, SuperAurora, SuperSequal and SuperSiriver. Starting in 2002, the varieties developed by SGI quickly attracted a grower base that by 2012 enabled SGI to exceed 60% of Australian alfalfa seed production. SGI's alfalfa seed varieties are bred to resist disease, have tolerance to salt, create persistence in the field, and produce high seed yields in Australian production. The company also has a number of developments within its breeding program pertaining to dormant alfalfa varieties, tropical alfalfa seed varieties, and ease of pollination.

SGI, like S&W, considers the goodwill of its seed grower base to be of premier importance. SGI's contracts with seed farmers under long term contracts that typically have initial terms of six years, extendable to ten years.  To manage risk for itself and its growers, seed pricing is not fixed by contract, but instead based upon pooled production which is sold over an entire season, with a view to optimizing the prices realized.  Due to its Southern Hemisphere location, SGI harvests seed in March through April, which is counter cyclical to S&W's July through October production in the Northern Hemisphere. The combined company will have the competitive advantages of year round production, which extends to all areas of the alfalfa seed business, including sales, inventory management and cash collection cycles. 

Mark Harvey, Director of Seed Genetics International, commented, "First, my thanks to S&W's Chairman, Grover Wickersham, and S&W's CFO, Matt Szot, for their long visits to Australia and their patience in negotiating over the last half year. While this is obviously a big move for us, the directors and management of SGI are truly excited about the advantages of a combined S&W/SGI and we want the challenge of continuing to build on what the four partners started."

Mr. Harvey expanded, "For our Australian growers, this means we will be expanding production under the umbrella of a public company with a strong balance sheet and financial resources. We also gain access to S&W's proven proprietary genetics. We look forward to collaborating with S&W's well respected breeder, Dan Gardner, who is well known by our own David Pengelly and Ross Downes. When we learned last year that Dan and our tough and respected sales and marketing competitor from IVS, Fred Fabre, had both joined S&W, it piqued our interest."

Mark Harvey continued, "S&W president, Mark Grewal, who used to manage Australian operations for Boswell Farms, has stressed to the SGI partners that he sees SGI going into S&W intact, with 100% of our SGI employees joining the S&W team. Further to SGI's new role as part of S&W, Dennis Jury will continue to run all Australian operations from Adelaide, while Matt Denton will remain on the Australian unit's management board, with all original SGI partners.  Additionally, Mark Harvey will be joining fellow Australians Mike Culhane and Glen Bornt, who are already on S&W's board of directors. What's more, all four SGI partners will become major shareholders of S&W."

Matt Szot, chief financial officer of S&W Seed Company, commented, "The acquisition of SGI will help balance out the seasonality that is inherent to S&W and all our competition in the non-dormant alfalfa business. Being located in the Southern Hemisphere, SGI generates the vast majority of its production and sales in the April through September time frame, while S&W mostly produces and sells from July through December. For this reason, S&W management has always had the strategic goal of adding Australian production. We are excited to be accomplishing that goal by acquiring the Australian market leader. We expect the transaction to be immediately accretive to S&W, with SGI currently estimating the 2013 harvest to conclude in April with approximately 8 million pounds of SGI's proprietary alfalfa seed varieties that should begin shipping in April 2013.  We look forward to managing the integration of S&W and SGI and bringing many efficiencies to our combined breeding programs, production chains and worldwide marketing and sales."

About S&W Seed Company
Founded in 1980 and headquartered in the Central Valley of California, S&W Seed Company is a leading producer of warm climate, high yield alfalfa seed varieties, including varieties that can thrive in poor, saline soils, as verified over decades of university-sponsored trials. S&W also offers seed cleaning and processing at its 40-acre facility in Five Points, California. Additionally, the company has recently launched a business expansion initiative centered on its plan to mass produce stevia leaf in the U.S. in response to growing global demand for the all-natural, zero calorie sweetener from the food and beverage industry. For more information, please visit www.swseedco.com.

Safe Harbor Statement
This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" describe future expectations, plans, results, or strategies and are generally preceded by words such as "may," "future," "plan" or "planned," "will" or "should," "expected," "anticipates," "draft," "eventually" or "projected." You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors and other risks identified in the company's Annual Report on Form 10-K for the fiscal year ended June 30, 2012, and in other filings made by the Company with the Securities and Exchange Commission.

Contact:

Robert Blum, Joe Dorame, Joe Diaz
Lytham Partners, LLC
602-889-9700
[email protected]
www.lythampartners.com

Matt Szot
Chief Financial Officer
S&W Seed Company
559-884-2535
www.swseedco.com

SOURCE S&W Seed Company

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Cloud applications are seeing a deluge of requests to support the exploding advanced analytics market. “Open analytics” is the emerging strategy to deliver that data through an open data access layer, in the cloud, to be directly consumed by external analytics tools and popular programming languages. An increasing number of data engineers and data scientists use a variety of platforms and advanced analytics languages such as SAS, R, Python and Java, as well as frameworks such as Hadoop and Spark...
Cloud promises the agility required by today’s digital businesses. As organizations adopt cloud based infrastructures and services, their IT resources become increasingly dynamic and hybrid in nature. Managing these require modern IT operations and tools. In his session at 20th Cloud Expo, Raj Sundaram, Senior Principal Product Manager at CA Technologies, will discuss how to modernize your IT operations in order to proactively manage your hybrid cloud and IT environments. He will be sharing bes...
Join us at Cloud Expo June 6-8 to find out how to securely connect your cloud app to any cloud or on-premises data source – without complex firewall changes. More users are demanding access to on-premises data from their cloud applications. It’s no longer a “nice-to-have” but an important differentiator that drives competitive advantages. It’s the new “must have” in the hybrid era. Users want capabilities that give them a unified view of the data to get closer to customers and grow business. The...
Automation is enabling enterprises to design, deploy, and manage more complex, hybrid cloud environments. Yet the people who manage these environments must be trained in and understanding these environments better than ever before. A new era of analytics and cognitive computing is adding intelligence, but also more complexity, to these cloud environments. How smart is your cloud? How smart should it be? In this power panel at 20th Cloud Expo, moderated by Conference Chair Roger Strukhoff, paneli...
For organizations that have amassed large sums of software complexity, taking a microservices approach is the first step toward DevOps and continuous improvement / development. Integrating system-level analysis with microservices makes it easier to change and add functionality to applications at any time without the increase of risk. Before you start big transformation projects or a cloud migration, make sure these changes won’t take down your entire organization.
Artificial intelligence, machine learning, neural networks. We’re in the midst of a wave of excitement around AI such as hasn’t been seen for a few decades. But those previous periods of inflated expectations led to troughs of disappointment. Will this time be different? Most likely. Applications of AI such as predictive analytics are already decreasing costs and improving reliability of industrial machinery. Furthermore, the funding and research going into AI now comes from a wide range of com...
"When we talk about cloud without compromise what we're talking about is that when people think about 'I need the flexibility of the cloud' - it's the ability to create applications and run them in a cloud environment that's far more flexible,” explained Matthew Finnie, CTO of Interoute, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
The current age of digital transformation means that IT organizations must adapt their toolset to cover all digital experiences, beyond just the end users’. Today’s businesses can no longer focus solely on the digital interactions they manage with employees or customers; they must now contend with non-traditional factors. Whether it's the power of brand to make or break a company, the need to monitor across all locations 24/7, or the ability to proactively resolve issues, companies must adapt to...
Internet of @ThingsExpo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 21st Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devic...
SYS-CON Events announced today that MobiDev, a client-oriented software development company, will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. MobiDev is a software company that develops and delivers turn-key mobile apps, websites, web services, and complex software systems for startups and enterprises. Since 2009 it has grown from a small group of passionate engineers and business...
SYS-CON Events announced today that GrapeUp, the leading provider of rapid product development at the speed of business, will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Grape Up is a software company, specialized in cloud native application development and professional services related to Cloud Foundry PaaS. With five expert teams that operate in various sectors of the market acr...
What's the role of an IT self-service portal when you get to continuous delivery and Infrastructure as Code? This general session showed how to create the continuous delivery culture and eight accelerators for leading the change. Don Demcsak is a DevOps and Cloud Native Modernization Principal for Dell EMC based out of New Jersey. He is a former, long time, Microsoft Most Valuable Professional, specializing in building and architecting Application Delivery Pipelines for hybrid legacy, and cloud ...
SYS-CON Events announced today that Ayehu will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on October 31 - November 2, 2017 at the Santa Clara Convention Center in Santa Clara California. Ayehu provides IT Process Automation & Orchestration solutions for IT and Security professionals to identify and resolve critical incidents and enable rapid containment, eradication, and recovery from cyber security breaches. Ayehu provides customers greater control over IT infras...
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend 21st Cloud Expo October 31 - November 2, 2017, at the Santa Clara Convention Center, CA, and June 12-14, 2018, at the Javits Center in New York City, NY, and learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
21st International Cloud Expo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Me...