SACRAMENTO, Calif.,
May 23, 2019 /PRNewswire/
-- S&W Seed Company (Nasdaq: SANW) and Corteva
Agriscience™, Agriculture Division of DowDuPont, today announced
they have entered into a new mutually beneficial alfalfa agreement
that terminates and replaces the December
2014 agreements between S&W and Pioneer Hi-Bred
International, Inc. As part of the new agreement, S&W will
receive $45 million in cash at
closing plus $25 million in payments
over regularly scheduled dates concluding in February 2021.
Pioneer will exit its 2014 agreements and related obligations
and receive a fully pre-paid, exclusive license to produce and
distribute certain S&W-owned varieties. In addition, as part of
the agreement terms above, Pioneer will receive seed inventory from
S&W with a book value of approximately $25 million and assume certain grower production
contract rights and obligations. Full terms of the agreement were
not disclosed.
Mark Wong, President & CEO of
S&W Seed Company, commented, "We believe this is a tremendous
agreement for S&W. This transaction allows S&W to pursue
additional high-value growth opportunities consistent with our
objective of building a leading integrated middle market
agricultural company. The transaction significantly improves our
financial position and strategic flexibility at a time when we
believe there are a number of attractive potential acquisitions in
the seed industry."
S&W retains ownership of all assets originally acquired in
the December 2014 asset purchase
transaction between S&W and Pioneer, including alfalfa
varieties and germplasm, research and development capabilities, and
production facilities.
Wong continued, "We are retaining alfalfa operations that are
well-positioned for growth in the U.S. and around the world.
Importantly, the agreement allows us to sell our next generation
alfalfa varieties into our farmer-dealer network in the U.S. and
proprietary distribution channels, allowing our customers to
benefit from years of leading-edge development."
Drew Porter, Global Alfalfa
Portfolio Leader for Corteva Agriscience said, "Alfalfa continues
to be an important part of our seed product lineup, particularly
for our Pioneer®, Dairyland® and
Alforex® brands. The 2017 DowDuPont merger included
heritage Dow AgroSciences alfalfa seed production and research
assets, as well as established sales channels. By keeping Pioneer
brand alfalfa seed research and manufacturing capabilities in-house
we are able to significantly lower our cost of goods, improve
return on invested capital for our seed business and continue to
serve customers with leading alfalfa products."
Matthew Szot, Chief Financial
Officer of S&W Seed Company added, "This new agreement, which
essentially accelerates the cashflow of the next five years of
minimum contractual obligations and further compensates S&W for
the upfront licensing of certain varieties, significantly improves
S&W's financial capabilities. Following the close, S&W will
boast more than $45 million in
additional net working capital and tangible book value. We look
forward to redeploying capital in a prudent manner that aligns with
our core long-term focus on building a growing middle market
agricultural company."
Wong concluded, "Over the past few years, S&W has
significantly transformed itself from a pure play alfalfa seed
company into a fully integrated, multi-crop seed development,
production and distribution company with strong positions in
sorghum, sunflower and alfalfa. We have realigned our sales
organization, acquired a highly leverageable U.S. farmer-dealer
network, continued to drive efficiencies in our production
processes, and accelerated development of next generation trait
technologies. Today's announcement allows us to continue and
potentially accelerate our strategic transformation."
About S&W Seed Company
Founded in 1980, S&W Seed Company is a global agricultural
company headquartered in Sacramento,
California. S&W's vision is to be the world's preferred
proprietary seed Company which supplies a range of forage and
specialty crop products that supports the growing global demand for
animal proteins and healthier consumer diets. S&W is a global
leader in alfalfa seed and sorghum hybrid, with significant
research and development, production and distribution capabilities.
S&W also provides hybrid sunflower and is utilizing its
research and breeding expertise to develop and produce stevia, the
all-natural, zero calorie sweetener for the food and beverage
industry. For more information, please visit www.swseedco.com.
®, TM, SM Trademarks and service marks
of DuPont, Dow AgroSciences or Pioneer, and their affiliated
companies or their respective owners.
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."
Forward-looking statements in this release include, but are not
limited to, our growth position; the importance of the license
agreement to our business; the opportunities presented by the
anticipated transactions with Corteva Agriscience and Pioneer,
including their alignment with our long-term objectives; activities
expected to occur in connection with the alfalfa license agreement
with Corteva; our ability to execute on our long-term objective of
building an integrated multi-crop, middle-market agricultural
company; the improvement in our financial position and expected
strategic flexibility; the availability of potentially attractive
acquisition opportunities in the seed industry; the strength of our
retained alfalfa operations, including the positioning of those
operations for domestic and international growth; the benefits of
our research and development efforts to our customers; the
improvement in our financial capabilities, including the extent to
which the transactions with Corteva Agriscience and Pioneer have
improved such capabilities; expected net working capital and
tangible book value and the intended use of the proceeds from the
transactions with Corteva Agriscience and Pioneer; and statements
regarding the advancement of our strategic plans. 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 risk that the activities
expected to occur in connection with the alfalfa license agreement
may not occur when expected, or at all; the risk that we may not
realize the benefits anticipated from the alfalfa license agreement
or the Pioneer termination agreement; the risk that our strategic
initiatives may not achieve the expected results; the risk that we
may not achieve the anticipated benefits from the use of the
proceeds from the transactions with Corteva Agriscience and
Pioneer, including any acquisitions or other strategic uses of such
proceeds; and the risks associated with our ability to successfully
optimize and commercialize our business. These and other risks are
identified in our filings with the Securities and Exchange
Commission, including, without limitation, our Annual Report on
Form 10-K for the year ended June 30,
2018 and in other filings subsequently made by us with the
Securities and Exchange Commission. All forward-looking statements
contained in this press release speak only as of the date on which
they were made and are based on management's assumptions and
estimates as of such date. We do not undertake any obligation to
publicly update any forward-looking statements, whether as a result
of the receipt of new information, the occurrence of future events
or otherwise.
Company
Contact:
|
Investor
Contact:
|
Matthew Szot, Chief
Financial Officer
|
Robert
Blum
|
S&W Seed
Company
|
Lytham Partners,
LLC
|
Phone: (559)
884-2535
|
Phone: (602)
889-9700
|
www.swseedco.com
|
sanw@lythampartners.com
|
|
www.lythampartners.com
|
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SOURCE S&W Seed Company