Arcadia Biosciences, a food and beverage group, has indicated the possibility of pursuing an acquisition or merger with the US company.
During an earnings call to review second-quarter results, the proprietor of GoodWheat pasta and Zola coconut water deliberated the prospect of a potential acquisition of the company.
Last month, Arcadia Biosciences revealed the initiation of a comprehensive evaluation of the company’s strategies, with a primary aim of optimizing long-term value for its shareholders. To aid in this endeavor, the company has enlisted the services of Minneapolis-based investment bank, Lake Street Capital Markets. This collaboration will involve a thorough exploration of strategic possibilities, encompassing potential avenues such as acquisitions, company divestiture, mergers, asset sales, joint ventures, licensing agreements, or capital augmentation.
CEO Stan Jacot said during the call, “As we had mentioned previously, our strategic plan calls for an acquisition that would allow us to bring the GoodWheat value proposition to an existing brand in a new wheat-based category.
“There are many categories in the grocery aisle where our proprietary wheat can provide significant differentiation, and we believe there is a tremendous opportunity to scale our business faster by purchasing an existing brand in a different category that already has broad shelf placement and established distribution.
“While we have narrowed the field of target acquisitions, we have also received several inquiries from parties interested in a larger merger, so we feel that this is the right time to explore the myriad of options with an objective banking partner, especially after closing of the second quarter of 2023 in an excellent cash position,” he added.
Jacot further stated the company’s objective to secure placement for GoodWheat in 3,000 retail stores by year’s end.
In the upcoming quarter, Arcadia Biosciences plans to implement price reductions for GoodWheat pasta as part of its strategy to maintain competitiveness.
Jacot said margins are likely to slide slightly, “It just is going to be kind of more like mid- to low-20s versus mid- to high-20s.”
The company is to wind down its SoulSpring CBD and ProVault recovery brands to focus on GoodWheat and Zola.
Arcadia Biosciences reported revenues of $1.4m for the quarter, down 64% on the previous year’s $3.9m. A year earlier, revenues included sales of GoodWheat grain and body care products that no longer are part of Arcadia’s portfolio.
However, the California-based company had net income of $823,000 this quarter compared to a net loss of $3.9m in the second quarter of 2022.
Over the first six months of the fiscal year, Arcadia sustained a net loss of $8.6m, which compared to a net loss of $8.3m in the corresponding period a year earlier. Six-month revenues of $2.9m were down 59% from $7.1m.