GRAND RAPIDS — A West Michigan investment firm focused on the agricultural industry has acquired its second seed company in the last nine months.
Greenville-based Tillerman Seeds LLC closed last week on a deal to acquire Legacy Seeds Inc., a producer of alfalfa, corn, wheat and soybean seeds in Scandinavia, Wis., executives confirmed to MiBiz.
The transaction included Legacy Seeds’ assets and real estate, as well as operations in Nampa, Idaho. With the deal, Tillerman Seeds builds on its acquisition last October of Dansville, Mich.-based DF Seeds LLC. The investment firm said the combined operations generate nearly $40 million in annual revenues and supply more than 800 farms in Michigan, Wisconsin and Idaho with seeds tailored to local microclimates.
The firm was drawn to the deal because Legacy shared a similar culture to DF Seeds, one that Tillerman Seeds wants to foster across its operations, according to executives.
“Legacy has an incredibly great team from sales to administration to production people, they’ve got an unbelievable product line, and they’ve got great customers,” said James Sheppard, the CEO of Tillerman Seeds. “We’re just extremely excited about this opportunity.”
The Grand Rapids-based investment banking firm Tillerman & Co. helped with capital formation for the deal and will serve in a financial management role for Tillerman Seeds until it hires a permanent CFO.
“The concept of Tillerman Seeds (is) we don’t change anything with the companies we buy. We give them a back office system that allows them to free up some time and people’s hours so they’re dedicated elsewhere,” said Remos Lenio, a partner at Tillerman & Co. “We’re just really here to provide liquidity for those companies that don’t have access to the capital markets but they have great operations.”
With the investment, Legacy Seeds was able to buy out founder Steve Jensen and minority partner Tyler Lee. CEO Bruce Ceranske will continue to lead Legacy Seeds, and remains an owner in the company.
According to Lenio, Ceranske wanted to avoid leveraging the company to complete the buyout, leading him to partner with Tillerman Seeds.
Horizon Bank provided senior debt financing to Tillerman Seeds for the transaction, while Effingham, Ill.-based private equity firm Open Prairie Ventures provided subordinated debt financing. The Grand Rapids office of law firm Barnes & Thornburg LLP advised Tillerman Seeds on the deal.
According to Sheppard, the addition of Legacy Seeds will create new opportunities to cross-pollinate seeds and collaborate on research and development with DF Seeds. As well, he cited Legacy Seeds’ alfalfa breeding operations as “one of the best out there, if not the best,” and noted that 30 percent of the company’s business comes from popular non-GMO seed lines.
After what Lenio described as “a long process” to close the deal for Legacy Seeds, Tillerman Seeds will now look to grow organically and through other acquisitions.
“We are very excited that we’ve positioned this company now for some pretty substantial growth over the next two to three years,” he said, noting some of the mega deals in the agricultural industry could also play in Tillerman Seeds’ favor.
“There are some spinoffs of the big companies that are going to be available to purchase, but more importantly, there are some phenomenal people who are being turned loose because of these mergers,” Lenio said. “There’s an opportunity to add some really well-qualified people to our ranks to help us grow in the sales side, or in the development side. That’s one of the big opportunities that we see.”