Vertical farming firm AeroFarms and Spring Valley Acquisition Corp., a publicly traded special purpose acquisition company (SPAC), have agreed to call off their planned merger, effective immediately,the companies said in a statement. The deal,announced in March, would have valued the new company at $1.2 billion.
The companies did not specify why they decided to terminate the planned merger. AeroFarms Co-Founder and CEO David Rosenberg, who would have led the new entity, said his company decided the merger was "not in the best interests of our shareholders."
The failure of theAeroFarmsSPACdeal is somewhat surprising considering how much money the controlled environment agriculture space has attracted recently in large fundraising rounds, includingBrightFarms,Revol Greens, and more recently,Bowery Farming, which raised $300 million this past May. AeroFarms has raised a total of $238 million over 10 funding rounds,根据Crunchbase实际上.
In the months leading up to AeroFarms' planned merger with Spring Valley and its public debut, the vertical farming company seemed to be making the case to investors that it had vision, expertise and most importantly, growth potential.
In April, AeroFarmshad a groundbreakingfor what it claimed would be the largest and most technologically advanced aeroponic indoor vertical farm in the world, located in Danville, Virginia. In June, it began construction on a research center in Abu Dhabi that it dedicated to trying to solve some of the world’s greatest agriculture challenges. This past July, AeroFarmsexpanded further into trendy microgreensanddoubled its retail footprintat Whole Foods Market stores in the Northeast and launched a pilot with Walmart in the Mid-Atlantic. And in August, itannounced a multiyear research agreementwith ingredient giant Cargill that would look at boosting cocoa bean yields.
The drumbeat of news made Rosenberg's statement on why it was pulling out of the merger difficult to reconcile.
"We made this decision to ensure that AeroFarms is in an optimal position to pursue our growth strategy and to deliver on our mission to grow the best plants possible for the betterment of humanity," said Rosenberg. He noted that AeroFarms continues to have "a great working relationship" with Spring Valley. (Food Dive reached out to AeroFarms for additional comment but has not received a response as of press time.)
Exactly why the deal fell through isn't clear. At least early on, signs were positive, with Spring Valley shareholders voting on Aug. 30 overwhelmingly to approve the merger,according to an 8-K formfiled with the Securities and Exchange Commission.
However, in astatement announcing the results of the vote, Spring Valley noted the minimum cash requirement as spelled out in the agreement had not yet been met. The SPAC and AeroFarms would look for additional, agreed upon sources of capital as they worked toward an anticipated closing date of Sept. 24.
Behind the scenes, something more complex may have been at work. Erik Gordon, a business professor at the University of Michigan, told Food Dive that shareholders of Spring Valley might have taken advantage of a clause in the terms of theSPAC documentsthat allowed them to vote in favor of the merger while at the same time redeeming the shares they owned for $10 each — the initial amount they paid for them.
同时，这些人保留了逮捕令，使他们可以选择以11.50美元的价格购买股票，此举使他们可以从SPAC合并与公司合并并且其股价上涨以上。
随着越来越多的投资者决定将每股10美元的股票收购，而不是将其股票投入到新公司中，因此Spring Valley的股价未达到同意在合并结案后达成交易的2.25亿美元。戈登说，这个空位似乎已经努力寻找其他方法来代替资金 - 由September announcementwhere both parties underscored their commitment to the deal — but was unable to do so.
The Spring Valley SPAC has been trading well below the $10 level for the last three weeks, and it was apparent shareholders felt more confident about getting their investment back than betting on the future of AeroFarms.
"This is a busted deal," Gordon said. "I guess the more people learned about AeroFarms, or the more they thought about AeroFarms, the harder it was to get the stock price even back up to $10. Nobody likes the AeroFarms deal enough to make it worth $10. You're safe if you redeem, you'll walk away whole and keep the warrants that just might be worth something in the future."
Spring Valley investors appeared to welcome the news; itsstock leaped more than 10%by close of trading on Thursday, the day the decision to terminate the merger was announced.
AeroFarmswould have been only the second controlled environment agriculture firm to go public. In February, indoor greenhouse giantappharvestcompleted its merger with SPAC Novus Capitalin a deal valued at $1 billion. But there too, investors' interest seems to have waned. Whileappharvest'sstock price spikedto a high of $37.64 on Feb. 22, a few weeks after it completed the merger, it has since fallen and has stayed near $6 and below through most of October.
Christopher Doering contributed to this report.
