Today, AgriFORCE (NASDAQ:AGRI) is one of the big winners in the market. Shares of AGRI stock have appreciated more than 60% at the time of writing. Additionally, this move has come on extremely heavy volume. More than 250 million shares have traded hands at the time of writing. This compares to an average daily volume around 600,000 shares.
Of course, this sort of high-volume upside swing indicates some big news for this company. Indeed, at one point today, AGRI stock had more than doubled.
A key intellectual property-focused AgTech company that only recently went public in July, AgriFORCE is a company that’s flown under the radar. A Canadian AgTech play with a market cap currently around $50 million, this is a stock that simply hasn’t been on the radar for most investors. Fair enough.
However, today the company made a big announcement. Let’s dive into what’s driving the price action in AGRI stock today.
AGRI Stock Higher on European Expansion Plans
Today, AgriFORCE announced the company has entered into a binding letter of intent to acquire a European consultancy. This deal provides entrance into the European market. In particular, AgriFORCE’s target company’s focus on “driving agricultural optimization, innovation, solutions and operational expertise in the agriculture and horticulture and Controlled Environment Agriculture (CEA) sectors” is something that aligns well with AgriFORCE’s business model.
Investors seem to like the details of this deal. The acquired company will provide $3 million in EBITDA (earnings before interest, taxes, depreciation and amortization) and revenues of $28 million to a company with a market cap around $50 million. For value investors, this makes AGRI stock look like a steal.
The company appears to be paying around $29 million for this deal. In other words, par value with the acquired company’s revenue stream. Again, for value investors, there’s a lot to like with the initial details provided by the company’s press release.
AgriFORCE believes a number of synergies are possible as a result of this deal. Time will tell. However, for now, investors seem to like where AgriFORCE is headed.
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On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
