Bayer AG is acquiring a majority stake in St. Louis-based agriculture startup CoverCress Inc., a move that comes as CoverCress this year plans for a full commercial launch of its newly created cash crop.
Bayer, the Germany-based pharmaceutical and agriculture giant, said Monday it has entered into a shareholders’ agreement to increase its existing investment in CoverCress to acquire a 65% ownership stake in the St. Louis startup. Financial terms of the deal were not disclosed. Bayer, which bought St. Louis-based agtech company Monsanto in 2018, has its Crop Science Division headquartered in Creve Coeur.
The remaining 35% ownership position in CoverCress will be held by two existing investors: Chesterfield-based agribusiness Bunge Ltd. (NYSE: BG) and Chevron U.S.A. Inc., a subsidiary of San Ramon, California-based energy giant Chevron Corp. (NYSE: CVX).
Bayer’s purchase of a majority stake in CoverCress marks a major milestone for the St. Louis agtech industry, making it the sector’s second significant startup exit within the past year, following food technology firm Benson Hill’s deal in September 2021 to become a publicly traded company. It also marks a win for local investors who have backed CoverCress since its founding. Local investors who have funded CoverCress include BioGenerator, St. Louis Arch Angels, Hermann Cos., Prolog Ventures, Cultivation Capital, Missouri Technology Corp., Yield Lab and St. Louis County Port Authority.
Founded in 2013, Creve Coeur-based CoverCress has developed a rotational, oilseed cash crop to provide winter and spring soil cover between corn harvest and soybean planting. It says its crop, based on the native plant pennycress, will produce low carbon intensity oil that’s slated to be used to produce fuels. The crop can also generate revenue as animal feed and high-protein meal.
“CoverCress is exciting because it has the potential to become an important source for biofuel production as a new harvested rotational crop, while giving growers an innovative option to continue effective stewardship of their land and improve soil quality by acting as a cover crop,” said Rodrigo Santos, president of the Bayer’s Crop Science Division. “As a global leader in crop science, we are committed to decarbonizing agriculture and helping farmers around the world become more sustainable through game-changing products and solutions that can impact climate change. This investment and collaboration between industry leaders is another proof point for our efforts."
In April, CoverCress announced it entered into a long-term commercial partnership with Bunge that involves processing grain from its crop to develop renewable fuels. That deal came shortly after Bunge and Chevron Corp. formed a joint venture focused on using crops to create low-carbon renewable fuel sources.
In 2021, CoverCress had a soft launch of its crop, planting it on several hundred acres, and CEO Mike DeCamp said the startup has a goal to grow it on 10,000 acres this year for its full commercial launch. The crop will be harvested in late spring of 2023 for its first customer, who will use its grain as an ingredient in feed pellets for broiler chickens, DeCamp said.
Bayer said Monday that CoverCress will operate as an independent company following the acquisition. The deal deepens strong existing roots between Bayer and CoverCress, which has a team that consists of several expats from Monsanto, including DeCamp and founder and Executive Chairman Jerry Steiner. Bayer’s corporate venture arm, Leaps by Bayer, has been an investor in CoverCress since 2015. Bayer has also aided CoverCress with other support to advance development of its crop. For example, CoverCress received its first combine harvester, used to advance its R&D efforts, as a donation from Bayer.
“Since our founding in 2013 we have actively sought – and benefited from – scientific, operational, and financial support from our academic and strategic partners. The progress we have made in converting pennycress into our novel, lower carbon intensity oilseed technology, CoverCress, would have been much slower without this critical support,” DeCamp said. "Our long-standing strategic partnership with Bayer and our more recent strategic partnerships with Bunge, and Chevron have provided us with access to expertise and capital that positions CCI very well for future success."
