AgriFORCE recently announced a binding LOI to acquire Deroose Plants NV, one of the largest tissue culture propagation companies in the world with a leadership position in horticulture, plantation crops, and fruit and vegetables. Troy McClellan, the President of AgriFORCE Solutions, explains more about this exciting development below.
- AgriFORCE Growing Systems stock is traded on the Nasdaq under the symbol AGRI
- Headquartered in Vancouver, Canada, AgriFORCE was incorporated in December 2017 and became a public company in July 2021
- The Company’s fiscal year end is December 31st
- Visit our Investor Relations page for more information.
Can you tell us more about Deroose Plants NV? What makes this an important acquisition for AgriFORCE?
Deroose Plants was founded in 1980, is headquartered in Belgium and has multinational operations in Europe, Asia, and North America. Deroose sells more than 50 million plants per year, has over 2.11 million square feet of laboratory and greenhouse facilities1 and over 800 employees2. The company creates, propagates, and produces crops for growers, delivering value through cutting-edge tissue culture technology, plant innovation and sales, and advanced greenhouse facilities. With locations on 4 continents, they also support the worldwide distribution of young plants and crops.
Deroose has leading expertise in floriculture, plantation crops such as palm and rubber, and fruits and vegetables such as bananas, blueberries and more. Our companies are fortunate to share a common vision and set of values around sustainability, innovation, and entrepreneurship. In the past decade, the seed market has consolidated, while the tissue culture market is still fragmented: Deroose offers a platform for advanced propagation and consolidation in tissue culture globally.
Through this acquisition, AgriFORCE and Deroose can realize a number of synergies with Delphy, who offers expertise on improving greenhouses, enhancing yields, and digitization and data management. We look forward to building on Deroose’s existing presence in the United States to bolster and expand the North American operations of both companies.
AgriFORCE is thrilled to welcome Deroose Plants to our family of companies. In terms of the acquisition itself, from the binding LOI we will enter the due diligence process, followed by a definitive agreement, and later, the transaction closing.
What is important about the Deroose plantation crops IP?
First, when it comes to plantation crops such as palm, rubber, banana and others, the amount of arable land available globally is scarce and restricted. Governments are no longer allowing additional land to be made available for these crops. However, Deroose has specific IP that enables increased yields per hectare for plantation crops, which can maximize the sustainability and productivity of available land. For example, Deroose Rubber Plants yield over 50% more than competitor trees and mature 1.5 years faster3. While there are some synthetic sources available, natural rubber is the primary source for the global rubber market. For oil palm, Deroose plants are estimated to provide a $100 USD increased yield per tree over the lifetime of the tree, with over 239 million trees projected to be replanted annually. Each of these crops represent significant potential in terms of the market value of trees to be replanted. For natural rubber, the annual market size for replanting is over $900 million USD; for oil palm it is $820 million USD, and for musa bananas, over $1 billion USD4.
Next, beyond Deroose’s existing footprint and operations, there are a number of important countries and regions that Deroose is in conversations to drive expansion and market penetration, including with Indonesia, Malaysia, and Thailand. These countries are the leading producers of natural rubber worldwide, and rubber plantation access is managed closely by the government. AgriFORCE and Deroose management teams anticipate a significant adoption rate of these genetics, with the potential to transform the industry and become new standards.
Finally, there are significant barriers to entry for competitors for plantation crop IP, as timelines for R&D and proof of yield performance takes at least 10 years. This makes the Deroose IP for plantation crops an important addition to the AgriFORCE IP portfolio. We look forward to delivering more value to growers, governments, and families in the years to come as we deepen our combined presence in a number of global markets.
Are there other plants and crops that Deroose has expertise in?
Deroose is a key leader in floriculture and foliage and is making advancements in fruit and vegetables, a notable growth area for the company. Recently Deroose completed deals in additional crop types such as artichoke, bell pepper, watermelon, and more. Furthermore, tissue culture cultivation in high value crops for use in pharmaceuticals and nutraceuticals is a high growth market. Deroose’s expertise, team, and facilities, combined with AgriFORCE leadership, IP and network, will enable accelerated development in this area.
What is attractive to Deroose Plants about teaming up with AgriFORCE?
Deroose is attracted by the AgriFORCE vision of integrated AgTech and the possibilities that it brings to drive meaningful growth in the industry. At AgriFORCE, we believe that creating an integrated approach to agriculture means more than just using off-the-shelf technology and elements to create “a system”. It requires deep knowledge and expertise to identify the grower’s challenges and opportunities for each specific crop. This starts right from the earliest stage of the plant’s development, which is a strategic strength of Deroose, a highly innovative company when it comes to tissue culture propagation and the growth of young plants. Then, they concentrate on what plants need and define the operational methodology to achieve the unique requirements of the crops. This is where the synergies with Delphy play an important role.
In short, our companies are strongly aligned with transforming the agriculture industry through IP, innovative technologies and expertise that enable cleaner, better crops with reduced environmental impacts.
- As per management’s previously audited financial statements.
- According to Tapping Test CV-AV-01-June 2015, Cote d’Ivoire, SIAT CHC 06.2018 to 12.2018, RRIM600
- As per Deroose market intelligence