8-K: Pluri Inc. Acquires 71.1% Equity Stake in Kokomodo for $4.5 Million in Stock

Pluri Inc. enters into a share purchase agreement to acquire a controlling interest in Kokomodo, a cocoa cultivation company, for $4.5 million paid in Pluri common shares.

Summary

• Pluri Inc. has agreed to acquire approximately 71.1% of the equity of Kokomodo Ltd., a company engaged in cocoa cultivation, through its wholly-owned subsidiary Pluri Biotech Ltd.
• The acquisition will be made via a Share Purchase Agreement with Chutzpah Holdings Limited and Plantae Bioscience Ltd., entities controlled by Mr. Alejandro Weinstein, a director of Pluri Inc.
• The purchase consideration is $4.5 million, payable in 976,139 common shares of Pluri Inc., representing 12.14% of Pluri's issued and outstanding share capital as of January 23, 2025.
• The agreement includes customary representations, warranties, indemnification, and registration rights.
• A breakup fee of $1.5 million is stipulated if the transaction is not completed by May 23, 2025, potentially extendable to July 23, 2025, under certain conditions.
• $1,000,000 of the breakup fee would be paid for the sale of the most senior class Company shares held by Seller, reflecting a valuation of $6,000,000.
• $500,000 of the breakup fee would be invested in the Company by form of a Simple Agreement For Future Equity (SAFE), providing a 20% discount of the price per share set in connection with a trigger event for conversion of the SAFE into equity of Kokomodo and a pre-money valuation cap of $5,500,000 in connection with such conversion.
• The closing of the transaction is subject to customary conditions, regulatory and corporate approvals, including shareholder approval.

Sentiment

Score: 6

Explanation: The sentiment is neutral. The announcement describes a standard business transaction with both positive and negative aspects. The deal provides diversification but also dilutes existing shareholders.

Positives

• Pluri Inc. gains a controlling interest in a company involved in cocoa cultivation, potentially diversifying its business.
• The acquisition is structured as an all-stock deal, conserving Pluri's cash reserves.
• The Share Purchase Agreement contains customary representation and warranties, agreements of the Purchaser and Seller and customary indemnification, registration rights and obligations of the parties.

Negatives

• Pluri Inc. will issue 976,139 common shares, diluting existing shareholders' equity.
• The deal is subject to shareholder approval, which may not be guaranteed.
• The transaction involves a director of Pluri Inc., which could raise conflict-of-interest concerns.

Risks

• The closing of the Kokomodo Transaction is subject to, among other conditions, the completion of customary closing conditions, compliance with any regulatory and corporate approvals, including receipt of shareholder approval.
• The conditions to the closing of the Kokomodo Transaction, including shareholder approval, may not be met.
• Changes in technology and market requirements could impact the success of the acquisition.
• Unforeseen scientific difficulties may develop with Kokomodo's processes.
• Kokomodo's products may wind up being more expensive than anticipated.
• Results in the laboratory may not translate to equally good results in real clinical settings.
• Changes in legislation with an adverse impact could affect the business.
• Inability to timely develop and introduce new technologies, products and applications could hinder growth.
• Loss of market share and pressure on pricing resulting from competition could impact profitability.

Future Outlook

The Company is using forward-looking statements when it discusses the expected closing of the Kokomodo Transaction; that the Kokomodo Transaction will be compliant with any regulatory and corporate approvals, including shareholder approval; and the potential implications and transactions that may occur in case that the transactions under the Share Purchase Agreement are not consummated.

Industry Context

This announcement reflects a strategic move by Pluri Inc. to expand its business interests into the cocoa cultivation sector. The acquisition could provide Pluri with new revenue streams and diversification, but also exposes it to the risks associated with the agricultural industry.

Comparison to Industry Standards

• It is difficult to compare this deal to industry standards without knowing the specific financial details of Kokomodo Ltd.
• Comparable transactions in the agricultural sector often involve multiples of revenue or EBITDA, which are not disclosed in this announcement.
• The all-stock nature of the deal is relatively common in acquisitions of smaller companies, as it allows the acquiring company to preserve cash.
• The breakup fee of $1.5 million represents approximately 33% of the total purchase price, which is within the typical range for such agreements.

Related Party Transactions

• The transaction involves Alejandro Weinstein, a director of Pluri Inc., as the owner of the selling entities (Chutzpah Holdings Limited and Plantae Bioscience Ltd.).

Stakeholder Impact

• Shareholders of Pluri Inc. will experience dilution due to the issuance of new shares.
• The acquisition could potentially benefit Pluri Inc. employees through diversification and growth opportunities.
• The acquisition could impact Kokomodo's employees, suppliers, and customers depending on the integration strategy.

Next Steps

• Completion of customary closing conditions.
• Compliance with regulatory and corporate approvals.
• Receipt of shareholder approval.

Key Dates