Farmland Partners Announces Merger With American Farmland Company
DENVER, CO and NEW YORK, NY - In a major move for the farmland real estate industry, Farmland Partners (FPI) has announced its intention to merge with American Farmland Company (AFCO), entering into a definitive agreement in which FPI has agreed to acquire all of the outstanding common stock of AFCO in a stock-for-stock transaction. While the exact terms of the agreement were not disclosed, the combined company will own more than $850 million worth of U.S. farmland assets, spanning 133,000 acres and 16 states.
“FPI's acquisition of these great assets assembled by AFCO will strengthen FPI's role as the leading public farmland real estate platform in the U.S.,” shared Paul Pittman, FPI’s Chairman and CEO. “This merger will significantly increase FPI's diversification across crops and geographies. Thanks to increased scale, we also expect to realize a reduction in overall costs as a percentage of portfolio value, creating superior value for our and AFCO's stockholders and our respective farmer partners.”
This merger will bring more specialty crops into FPI’s portfolio, according to a press release, which currently primarily consists of crops like blueberries, corn, and row crop farmland. The companies expect their new portfolio to consist of approximately 75% row crop farmland and 25% specialty crops.
“We believe this opportunity to join FPI's robust platform presents a meaningful opportunity to our stockholders,” Thomas S.T. Gimbel, AFCO's Chief Executive Officer, commented. “As the end result of a thorough process we commenced in April of this year, we are confident that the complementary nature of this transaction will accomplish our goal of enhancing stockholder value while preserving our core principles and continuing to execute on our vision for a scalable institutional, well-diversified, and high-quality portfolio of farmland assets.”
Paul A. Pittman will remain Chairman and CEO of FPI, D. Dixon Boardman and Thomas S. T. Gimbel, AFCO's Chairman and CEO, respectively, will join FPI's Board of Directors.
The following terms were reached under the new agreement:
- Each share of AFCO common stock and each AFCO operating partnership unit will be converted into the right to receive 0.7417 shares (or units) of newly issued FPI common stock (or units)
- On a pro-forma fully diluted basis, former FPI equity holders will hold approximately 65% of the combined company's equity, and former AFCO equity holders will hold approximately 35%
- The stock-for-stock merger is intended to qualify as a tax-free reorganization
- The transaction is subject to customary closing conditions, including receipt of the requisite approval of both FPI and AFCO stockholders
As of now, both companies' Boards of Directors have approved the transaction, sending the transaction to their respective stockholders for approval. The transaction is expected either to close by the end of the year, or early during the first quarter of 2017.