The merger between cannabis technology provider AgriFi Inc. and environmentally controlled agriculture technology company Nature's Miracle Inc. has been halted due to “adverse market conditions,” according to an announcement Monday.
The deal, announced in April, was valued at an undisclosed amount, but listed AgriFi's stock was valued at $6.3 million.
Stock prices fall after news
Agrify (AGFY) stock fell nearly 15% during trading on the Nasdaq exchange on Monday, falling from 33 cents per share at the open to 28 cents by midday.
Nature's Miracle stock (NMHI) fell more than 20% in Nasdaq trading on Monday, from 74 cents in the morning to just under 54 cents.
Under the terms of the original “large-scale integration” agreement, Nature's Miracle will purchase $750,000 of LED lighting equipment from Agrify, headquartered in Troy, Michigan, and led by Agrify CEO Raymond Chan. It was to take over the company's debts owned by the businesses it controls for an unspecified amount of cash and stock. .
Mr. Chan was to become president of Nature's Miracle's new division, AgriFi, and a director of the combined company.
Under the terms of the original transaction, Upland, Calif.-based Nature's Miracle will issue 0.45 shares of common stock for each Agrify share to Agrify stockholders.
Agrify admits it is struggling
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 that its “ability to continue as a going concern is in serious doubt.”
However, in announcing the cancellation of the merger, Chan said AgriFi “continues to see strong quarter-over-quarter momentum and pipeline growth in both its Cultivation and Extraction business segments.”
“We believe it is in Agrify's best interest to maintain this policy and continue to implement it,” he added.
