US greenhouse company Local Bounti is more than doubling the size of its flagship facility in Hamilton, Montana, and plans to break ground on two additional facilities in the Western U.S. before the end of this year. The company’s pipeline includes eight facilities and a plan for 30 SKUs by the end of 2025. To finance this aggressive expansion, the company has agreed to go public through a merger with Leo Holdings III Corp.
“Today’s announcement takes Local Bounti to the next level in enabling local, sustainable production and delivery of fresh, delicious and nutritious produce, including in regions that traditionally don’t have access to local supply, starting in the Western U.S. and expanding globally,” said Local Bounti Co-Founder and Co-CEO Craig Hurlbert last Friday. According to him, the Local Bounti leafy greens are currently in more than 400 retail stores.
Market opportunity
Local Bounti believes the current Western U.S. market opportunity is approximately $10.6 billion, and estimates that the total U.S. market for vegetables and herbs will reach up to $30 billion by 2025.
“We look forward to leveraging our business model as we accelerate the building of local production facilities that feature our proprietary IP, referred to as Stack & Flow Technology TM, and transforming conventional agriculture practices for the benefit of all our customers, no matter where in the world they’re located,” he said, adding that the company’s growth plans include adding seven new facilities and local leadership in different geographic regions, as well as global expansion of its proprietary technology.
The company’s business model is based on building local facilities, operated by local teams, to deliver fresh, high-quality produce to local communities while maintaining a limited carbon footprint.
New York Stock Exchange
Local Bounti has agreed to go public through a merger with Leo Holdings III Corp. a publicly traded special purpose acquisition company.
“Local Bounti is set to be a transformational force in the AgTech industry with its demonstrated concept and model in food production and distribution,” said Lyndon Lea, President and CEO of Leo. “Combining Local Bounti’s emphasis on innovation, entrepreneurial spirit, and technology-driven approach with the institutional knowledge of the Leo Holdings team, we are confident in the company’s ability to expand in both reach and consumer offerings.”
Transaction values
The transaction values the combined company at an equity value of $1.1 billion (assuming no redemptions) and upon closing of the transaction, the combined company is expected to remain listed on the New York Stock Exchange under the symbol “LOCL”.
As a result of the transaction with Leo, Local Bounti will receive up to $400 million in gross proceeds (assuming no redemptions), including $125 million from a fully committed PIPE anchored by existing investors and new investors, including Fidelity Management & Research Company LLC, BNP Paribas Asset Management Ecosystem Restoration Fund and Cargill.
One of the company’s key investors is Cargill which is listed as a strategic partner and will invest in the company as part of the SPAC deal. Cargill will also provide a $200 million debt facility to help with Local Bounti’s expansion plans. Also Sarath Ratanavadi, CEO of Gulf Energy Development Public Company Limited – Thailand’s largest private energy and infrastructure company − is investing in the combined company through a private investment in public equity (PIPE) arrangement. Cargill is also expected to provide $200 million in debt financing to accelerate Local Bounti’s expansion plans.