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Shares of Arcadia Biosciences RKDA surged 105% since it announced on Thursday that it signed a definitive securities exchange agreement with Roosevelt Resources LP to combine the two companies in an all-stock transaction.
Details of the RKDA-Roosevelt Merger
Under the terms of the agreement, the partners of Roosevelt will receive shares of Arcadia Biosciences common stock in exchange for their equity interests. Upon closing, the current Roosevelt equity owners and Arcadia Biosciences shareholders will own approximately 90% and 10% of Arcadia Biosciences' outstanding shares, respectively.
Following the closing of the deal, the new company will be called Roosevelt Resources Inc. and is expected to trade under a new trading symbol. The new entity will be managed by the current Roosevelt management team with the assistance of one or more members of Arcadia Biosciences management.
The deal is expected to close during the first quarter of 2025, subject to regulatory approvals.
Arcadia Biosciences’ Transformation to an Oil & Gas Company
Arcadia Biosciences has been conducting a thorough strategic assessment since July 2023 to identify opportunities for enhancing shareholder value.
In May 2024, Arcadia Biosciences sold its GoodWheat brand to Above Food Corp. During the month, RKDA also sold its Resistant Starch (”RS”) Durum trait to Corteva Agriscience, a subsidiary of Corteva CTVA. The company received $4.0 million in cash from Corteva.
Roosevelt is a privately held oil and gas company based in Texas. Its primary asset is a 16,208-acre CCUS project in the Texas Permian Basin, planned for development as an EOR project with anticipated peak production of 55,000 gross barrels of oil equivalent per day by 2051.
Arcadia Biosciences will capitalize on Roosevelt’s vast oil and gas assets, particularly its CCUS project. The new entity marks a significant strategic shift for Arcadia Biosciences, transitioning from an agricultural biotech to an oil and gas company.
The combined businesses will enhance shareholder value and streamline operations.
RKDA Stock’s Price Performance
RKDA’s shares have gained 93.2% over the past year compared with the industry's 4.5% growth.
Image Source: Zacks Investment Research
Arcadia Biosciences’ Zacks Rank & Stocks to Consider
RKDA currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the basic materials space are CF Industries Inc. CF and Ingevity Corporation NGVT. While CF sports a Zacks Rank #1 (Strong Buy) at present, NGVT carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CF Industries has an average trailing four-quarter earnings surprise of 10.3%. The Zacks Consensus Estimate for CF’s 2024 earnings is pegged at $6.32 per share. CF’s shares gained 20.6% in the last year.
Ingevity has an average trailing four-quarter earnings surprise of 95.4%. The Zacks Consensus Estimate for NGVT’s 2024 earnings is pegged at $2.55 per share. Its shares gained 25.7% in the last year.