Food and beverage group Arcadia Biosciences has suggested an acquisition or merger could be on the cards for the US company.
The owner of GoodWheat pasta and Zola coconut water discussed a potential takeover of the company during an earnings call to discuss second-quarter results.
Arcadia Biosciences announced a strategic review of the company last month which “focussed on maximising long-term shareholder value”. It has hired Lake Street Capital Markets, a Minneapolis-based investment bank, to explore strategic opportunities, which may include an acquisition, the sale of the company, a merger, an asset sale, a joint venture, a licensing deal or a capital raise.
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.
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Jacot added that the company is aiming to have GoodWheat in 3,000 retail stores by the end of the year.
Arcadia Biosciences is also set to decrease prices for GoodWheat pasta in the next quarter to remain competitive.
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.