Farmland Partners acquires American Farmland Company
Sep. 14, 2016
The combined company will be the largest public farmland REIT in the nation spanning more than 133,000 acres across 16 states, along both Coasts, the Midwest, the Plains and the Delta. The merger brings together two highly complementary leading farmland portfolios. FPI's assets are comprised primarily of premier row crop farmland, while AFCO's portfolio is concentrated in high-quality specialty and permanent crop farms across the U.S. On a consolidated basis, the combined company's portfolio is expected to consist of approximately 75% row crop farmland and 25% specialty crops by value. FPI expects to consolidate AFCO's operations into FPI's existing Denver-based headquarters and to realize significant cost synergies through eliminating duplicate administrative and other public company costs.
Paul A. Pittman will continue as FPI's Chairman and CEO. D. Dixon Boardman and Thomas S. T. Gimbel, AFCO's Chairman and CEO, respectively, will join FPI's Board of Directors.
Commenting on the merger, Paul Pittman, FPI Chairman and CEO, said, "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. 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."
Thomas S.T. Gimbel, AFCO's Chief Executive Officer, commented, "We believe this opportunity to join FPI's robust platform presents a meaningful opportunity to our stockholders. 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."
Under the terms of the 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, following the merger, 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.
Both companies' boards of directors have approved the transaction and recommend the transaction for approval by their respective stockholders. The parties currently expect the transaction to close in the later part of this year or early during the first quarter of 2017.