Shares of Arcadia Biosciences, Inc. (NASDAQ:RKDA) are trading higher Thursday following the company's announcement of an all-stock merger with Roosevelt Resources LP. Here's what you need to know.

What To Know: Under the terms of the agreement, Roosevelt will acquire a 90% equity stake in the combined entity. The transaction is expected to close in the first quarter of 2025, pending customary regulatory and shareholder approvals.

The merger represents a significant shift in Arcadia's business focus. Arcadia, which has historically concentrated on agricultural innovation and wellness products such as Zola coconut water, has been undergoing a strategic review since mid-2023. The company has streamlined operations, reduced expenses and divested assets, including its GoodWheat brand.

According to T.J. Schaefer, CEO of Arcadia, the decision to merge with Roosevelt was the result of an extensive evaluation of alternatives aimed at maximizing shareholder value.

Roosevelt Resources, a privately held Dallas-based company, specializes in oil and gas exploration and production with a focus on carbon capture utilization and storage (CCUS) projects. Roosevelt's primary asset is a 16,208-acre oil and gas development project located in the Permian Basin's Northwest Shelf. This project, designed to utilize CO2-enhanced oil recovery methods, has been in development since 2007 and is projected to achieve peak production of 55,000 barrels of oil equivalent per day by 2051.

The financial terms of the deal include the issuance of Arcadia shares to Roosevelt's partners, resulting in Arcadia shareholders retaining only a 10% stake in the combined company. Following the merger, the new entity will operate under the name Roosevelt Resources Inc., with Roosevelt's current management taking control.

Elliott "Tony" Roosevelt Jr., Roosevelt's CEO, highlighted the historical and strategic significance of the project, which has been in the Roosevelt family for over a century. Roosevelt has invested $82 million into the development, including securing CO2 supply agreements and commissioning third-party studies to validate the project's technical recoverability, estimated at 956 million barrels of oil equivalent over a 70-year lifecycle.

The proposed merger and its potential benefits will be discussed during a joint investor call scheduled for Dec. 11. Pending approval, Arcadia will apply for a new Nasdaq trading symbol to reflect the name change to Roosevelt Resources, Inc.

RKDA Price Action: Arcadia Biosciences shares were up 210.3% at $8.21 at the time of writing, according to Benzinga Pro.

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