The anticipated merger between cannabis technology provider Agrify Corp. and controlled-environment ag-tech firm Nature’s Miracle has been called off due to what was described as “unfavorable market conditions,” according to an announcement made on Monday.

Deal Details

The merger deal, which was announced in April, was for an undisclosed amount but valued the equity of publicly traded Agrify at $6.3 million. Under the terms of the original agreement, Nature’s Miracle was set to purchase $750,000 worth of LED lighting equipment from Agrify and take on Agrify’s debt, which was held by businesses controlled by Agrify CEO Raymond Chang. This would have been exchanged for an unspecified amount of cash and stock.

Stock Market Response

Following the announcement of the merger’s cancellation, both Agrify (AGFY) and Nature’s Miracle (NMHI) saw significant drops in their stock prices. Agrify’s shares tumbled nearly 15% on the Nasdaq exchange, while Nature’s Miracle shares fell more than 20%.

Terms of the Initial Deal

As part of the initial merger deal, Agrify shareholders were to receive 0.45 common shares of Nature’s Miracle for each Agrify share. Additionally, Raymond Chang was slated to become the president of a new Agrify division within Nature’s Miracle and join the combined company’s board.

Agrify’s Challenges

The decision to pursue the merger came after Agrify reported an annual net loss of $18.7 million in an earnings call. In its annual 10-K report, Agrify expressed doubts about its ability to continue as a going concern. However, despite these challenges, Chang expressed confidence in Agrify’s future, citing strong momentum and growth in both cultivation and extraction business divisions.

While the merger between Agrify and Nature’s Miracle has been called off due to unfavorable market conditions, Agrify remains committed to its growth trajectory. The company sees potential in staying the course and continuing to execute its business strategies despite the setback in the merger plans.