Farmland Partners Inc. (FPI) is acquiring all of the outstanding common stock of American Farmland Company (AFCO) in a stock-for-stock transaction.
The combined company will be the largest public farmland real estate investment trust (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.
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.
Upon consummation of the merger, FPI will significantly increase its scale and improve the quality and diversification of its portfolio while expanding its market presence in key farming regions across the U.S., which is expected to result in strategic and financial benefits for stockholders:
- Larger, More Diversified Portfolio of High-Quality Assets: The combined company's portfolio is expected to be comprised of institutional-quality farmland assets located in key farming regions in 16 states around the U.S. along both Coasts, the Midwest, the Plains and the Delta. The portfolio will also be diversified by crop type, with approximately 75% of the portfolio (by value) to be comprised of row crop farmland and approximately 25% of the portfolio to be comprised of specialty and permanent crops.
- Increased Scale: The combined company is expected to maximize operational efficiencies and lead to significant cost savings resulting from consolidating overhead expenses into FPI's existing operations. The increased scale of the combined enterprise is also expected to provide an enhanced platform to pursue accretive acquisitions in row, specialty and permanent crop farmland across a wider geographic footprint.
- Reinforces FPI's Position as the Leading Farmland REIT: The acquisition of AFCO further reinforces FPI's position as the largest, most diversified and most liquid public farmland REIT.
- Increased Revenues: On a pro-forma basis, the transaction is expected to contribute approximately $16 million of revenue in 2016, increasing FPI's total revenue from $26 million to approximately $42 million.
- Transaction Accretion to both AFCO and FPI Stockholders: The transaction is expected to be approximately 10% accretive to FPI's AFFO per share in 2017 growing to 20% accretive as synergies are fully realized.
- Greater Access to Capital: After giving effect to the transaction, the combined company is expected to have a fully-diluted market cap of approximately $400 million. The size and scale of the combined company is expected to provide greater access to global investors targeting investments in U.S. farmland assets.