Item
1.01
.
Entry into a Material Definitiv
e Agreement
.
On September 12, 2016, American Farmland Company (the “Company”) and American Farmland Company L.P. (the “Operating Partnership” and, together with the Company, the “AFCO Parties”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Farmland Partners Inc. (“FPI”), Farmland Partners Operating Partnership, LP (“ Farmland Partners OP”), Farmland Partners OP GP LLC (the “General Partner”), FPI Heartland LLC (“Parent Merger Sub”), FPI Heartland Operating Partnership, LP (“OP Merger Sub”) and FPI Heartland GP LLC (“OP Merger Sub GP” and together with FPI, Farmland Partners OP, the General Partner, Parent Merger Sub and OP Merger Sub, the “FPI Parties”). The Merger Agreement, the Mergers (defined below) and the other transactions contemplated by the Merger Agreement were approved by the Company’s Board of Directors.
Pursuant to the terms of the Merger Agreement, subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement:
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OP Merger Sub will be merged with and into the Operating Partnership (the “Partnership Merger”) at the effective time of the Partnership Merger (the “Partnership Merger Effective Time”), whereupon the separate existence of OP Merger Sub will cease and the Operating Partnership will be the surviving entity and a subsidiary of FPI and OP Merger Sub GP, with OP Merger Sub GP serving as its general partner; and
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The Company will be merged with and into Parent Merger Sub (the “Company Merger” and, together with the Partnership Merger, the “Mergers”) at the effective time of the Company Merger (the “Company Merger Effective Time”), whereupon the separate existence of the Company will cease and Parent Merger Sub will be the surviving entity and a wholly-owned subsidiary of FPI.
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At the Company Merger Effective Time, each share of common stock of the Company, par value $0.01 per share (“Company Common Stock”), issued and outstanding immediately prior to the Company Merger Effective Time (other than any shares of Company Common Stock owned by any wholly-owned subsidiary of the Company or by any FPI Party or any of their respective wholly-owned subsidiaries), will be automatically converted into the right to receive, subject to certain adjustments, 0.7417 shares of FPI Common Stock (as defined below) (the “Company Merger Consideration”).
In addition, in connection with the Company Merger, each outstanding restricted stock unit of the Company that has become fully earned and vested in accordance with its terms will, at the Company Merger Effective Time, be converted into the right to receive the Company Merger Consideration.
At the Partnership Merger Effective Time, each common unit of limited partnership interest in the Operating Partnership issued and outstanding immediately prior to the Partnership Merger Effective Time, will be converted automatically into the right to receive, subject to certain adjustments, 0.7417 Class A common units of limited partnership interest in Farmland Partners OP (the “Partnership Merger Consideration” and, together with the Company Merger Consideration, the “Merger Consideration”).
The AFCO Parties and the FPI Parties have made certain customary representations and warranties in the Merger Agreement and have agreed to customary covenants, including with respect to the conduct of business prior to the closing and covenants prohibiting the AFCO Parties and the FPI Parties from soliciting, providing non-public information or entering into discussions or agreements concerning proposals relating to alternative business combination transactions, subject to certain limited exceptions.
The Company will be permitted to pay its regular quarterly dividend in an amount not to exceed $0.0625 per share, and FPI will be permitted to pay its regular quarterly dividend in an amount not to exceed $0.1275 per share.
Pursuant to the Merger Agreement, immediately following the Company Merger Effective Time, the size of FPI’s Board of Directors will be increased to eight members, and Thomas S.T. Gimbel and D. Dixon Boardman will be elected to FPI’s Board of Directors. Each of Messrs. Gimbel and Boardman is currently a member of the Company’s Board of Directors.
The Merger
s are
subject to customary closing conditions including, among other things,
(1) the approval of the Company Merger by the affirmative vote of holders of Company Common Stock representing a majority of the votes ent
itled to be cast on the matter,
(
2
) the approval of the issuance of shares
of
FPI
’s
common stock
, $0.01 par value per share (“
FPI
Common Stock”)
,
in connection with the
Company
Merger by the affirmative vote of a majority of th
e votes cast by holders of
F
PI
Common
S
tock entitled to vote on the matter, (3) the approval for the New York Stock Exchange listing of the
shares of
FPI
Common S
tock to be issued in the Company Merger, (4) the absence of any law, injunction, judgment, order or ruling prohibiting the
Merger
s
, (5) the accuracy of the representations and warranties made by the parties (subject to customary materiality qualifications), (6) the performance by the parties in all material respects of their covenants, obligations and agreements under the Mer
ger Agreement, (7) the delivery of tax opinions related to each of
the Company’s
and
FPI
’s status as a real estate investment trust under the Internal Revenue Code of 1986, as amended (the “Code”)
,
and (8) the delivery of tax opinions that the
Company
Merg
er will qualify as a reorganization within the meaning of Section 368(a) of the Code.
The Merger Agreement may be terminated under certain customary circumstances, including by mutual consent or by the Company or FPI (1) if the other party’s Board of Directors fails to support approval of the Merger, supports approval of a competing transaction, or willfully breaches its covenant not to solicit a competing transaction, (2) upon failure of either party to obtain stockholder approval, (3) if a final non-appealable order is issued prohibiting the Mergers, (4) if the Mergers have not been consummated on or before March 31, 2017, or (5) upon a material breach by the other party that would result in the failure of a closing condition to be capable of being satisfied before March 31, 2017. Additionally, each of the Company and FPI may terminate the Merger Agreement in order to enter into an alternative transaction that is considered a superior proposal, following a prescribed process including a period of negotiation. In connection with the termination of the Merger Agreement for such reason and under other specified circumstances set forth in the Merger Agreement, the terminating party will be required to pay a termination fee of $6.0 million. Each of the Company and FPI will bear its own expenses in the transaction; however, a party will be required to reimburse the expenses of the other party up to $1,000,000 in the event that one party, but not the other, has failed to obtain stockholder approval and the Merger Agreement has been terminated for that reason.
A copy of the Merger Agreement is attached hereto as Exhibit 2.1 and is incorporated herein by reference. The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement.
The Merger Agreement has been attached to provide investors with information regarding its terms. It is not intended to provide any other factual information about the FPI Parties or the AFCO Parties. In particular, the assertions embodied in the representations and warranties in the Merger Agreement were made as of a specified date, are modified or qualified by information in confidential disclosure letters provided by each party to the other in connection with the signing of the Merger Agreement, may be subject to a contractual standard of materiality different from what might be viewed as material to stockholders, or may have been used for the purpose of allocating risk between the parties. Accordingly, the representations and warranties in the Merger Agreement are not necessarily characterizations of the actual state of facts about the Company and FPI at the time they were made or otherwise and should only be read in conjunction with the other information that the Company makes publicly available in reports, statements and other documents filed with the Securities and Exchange Commission (the “SEC”).