Farmland Partners Inc. (FPI), a publicly traded real estate investment trust, has been the buzz of farm country for more than a year. They've bought farmland and in some cases paid prices farmers couldn't afford. Today, FPI announced it will acquire American Farmland Company (AFCO) to create one giant land corporation. The combined company will own 133,000 acres, worth $850 million, across 16 states, both coasts, the Midwest, the Plains and the Delta, according to officials.
“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,” officials said in a joint news release.
The acquisition will secure Farmland Partners' role as a leading farmland real estate platform in the U.S., officials say.
“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,” said Paul Pittman, chairman and CEO of Farmland Partners.
The acquisition will mean some changes for AFCO shareholders, the news release says.
“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 release said.
Farmland Partners and AFCO have been in talks about the merger since April, according to Thomas S.T. Gimbel, CEO of AFCO. Both boards of directors have approved the transaction and expect it to be complete by the end of this year or the first quarter of 2017.