S&W Seed Co. announced that it has acquired Imperial Valley Seeds Inc., a marketer of non-dormant alfalfa seed varieties to international markets, principally the Middle East, North Africa and Latin America. The purchase price was approximately $6 million, consisting of $3 million in cash, a $500,000 five-year note and 400,000 shares of S&W common stock.
IV Seeds is the international marketing arm of Imperial Valley Milling, a Holtville, Calif.-based producer and processor of alfalfa seeds, established in 1921. IV Seeds was founded in Sacramento, Calif., as the export arm of IV Milling in 1999. IV Milling will continue to operate under its existing ownership and IV Seeds will continue to source substantially all of its production from IV Milling under the terms of a long-term supply contract between the two companies.
"This acquisition is the culmination of years of close relations with IV Seeds and IV Milling, and I am gratified it came together now while we can plan the 2013 crop together," Mark Grewal, president and CEO of S&W, stated. "S&W just doubled in size, including acreage for production, milling capability and geographical stretch and we vastly improved our international sales capabilities."
IV Seeds' president and cofounder, Fred Fabre, a respected leader in the alfalfa seed industry, built IV Seeds into a growing business in all of the world's major forage seed consuming countries, generating revenues of approximately $16 million (unaudited) during the year ended Dec. 31, 2011. S&W believes that the acquisition will be immediately accretive to the company's earnings and will be filing audited financial results from IV Seeds in accordance with SEC guidelines, which will be no later than 74 days. Fred Fabre becomes the vice president of sales and marketing of S&W Seed Co. and will oversee global sales of all S&W Seed and IV Seed alfalfa products.
"This acquisition fits our growth strategy well, by dramatically increasing our participation in the global alfalfa seed market, and by providing both geographic and new product diversification," commented S&W Seed Co.'s chairman, Grover Wickersham. "IV Seeds has an impressive customer base in many countries we do not sell in and is a major market force in all the areas where we already operate. Through IV Seeds we can also access IV Milling's premier grower base in Imperial Valley to immediately expand production of S&W's own proprietary varieties, starting with the fall planting season."
IV Seeds sells a wide range of proprietary and non-proprietary, certified and uncertified, coated and uncoated alfalfa seed into a number of countries. These countries include Saudi Arabia, Argentina, Bolivia, Sudan, Ecuador, Egypt, Italy, Jordan, Kuwait, Mexico, Morocco, Peru, Algeria and Portugal. The IV Seeds assets being acquired include three proprietary, non-dormant alfalfa seed varieties named Catalina, Saltana and LaJolla.
"I am very excited about the opportunities created by combining forces with S&W," commented Mr. Fabre. "The combined companies will create a powerhouse for providing premium alfalfa seed varieties and improved forage products to the world market. In addition to exciting new varieties and advanced technologies, the combined companies will offer customers around the world new levels of service and expanded levels of support."