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Fertilizer producer Converted Organics Inc. said Tuesday it has reached an agreement to acquire a Boston-based vertical-farming company for $26 million.
Converted Organics, a publicly-held company based in Boston, announced it plans to acquire TerraSphere Systems LLC in an all-stock transaction. The acquisition is subject to the approval of Converted Organics’ shareholders, which is expected to be sought in September.
TerraSphere designs, builds and operates vertical systems for growing pesticide-free organic fruits and vegetables. The company, which also has a location in British Columbia, has seen revenue of $4.5 million so far this year, according to Converted Organics.
The technology used by TerraSphere promises a tenfold greater crop yield per square foot and aims to dramatically reduce the use of land, water and power, according to Converted Organics.
Current partners of TerraSphere include a major natural foods grocer in Western Canada, Choices Market and the Squamish First Nation of Vancouver, B.C., where TerraSphere operates a facility that is expected to produce a commercial crop within two weeks.
Converted Organics went public in 2007 and was classified as a development-stage company through mid-2008.
The company saw $2.6 million in revenue in 2009, surpassing the $1.5 million in revenue the year before. The company reported a net loss of $21.1 million in 2009, above the $16.1 million net loss in the previous year.
Converted Organics previously acquired two companies, both in January 2008. The acquisitions were of a California waste-to-fertilizer company and a California liquid fertilizer company that had operated a production plant, which became Converted Organics’ first plant. Converted Organics opened a second plant in New Jersey in 2008.
Edward Gildea, president and CEO of Converted Organics, already owns an 8.75 percent stake in TerraSphere, according to a filing with the U.S. Securities and Exchange Commission. One of Gildea’s brothers, Mark Gildea, is also an employee of TerraSphere, and another brother, William Gildea, is an independent contractor of Terrasphere, according to the filing. The board of Converted Organics formed a special committee to evaluate and negotiate the purchase of Terrasphere, and Edward Gildea did not participate in the negotiations, according to the filing.
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