Is Farmers Edge Being Sold Off At A Loss?

Farmers Edge (TSX: FDGE) has officially announced its entry into an arrangement agreement with 15635594 Canada Inc., a newly-formed subsidiary of Fairfax Financial Holdings Limited, the majority shareholder of Farmers Edge.

The agreement outlines a transaction wherein Fairfax will acquire all common shares in the capital of Farmers Edge as well as the common shares held by the chief executive officer, Vibhore Arora. The agreed-upon purchase price stands at $0.35 per common share, payable in cash.

The deal follows a series of negotiations initiated after Farmers Edge’s board of directors received an initial proposal from Fairfax at $0.25 per common share on November 16, 2023. The signing of the arrangement agreement occurred subsequent to the unanimous recommendation of the special committee of independent directors of the board.

The purchase price, set at $0.35 per common share, represents a substantial 218% premium to both the closing price and the 20-day volume-weighted average price per common share on the Toronto Stock Exchange as of November 15, 2023, the day before the company received the original proposal.

The planned transaction is anticipated to conclude in the first quarter of 2024. The closure is subject to shareholder and court approvals, along with customary closing conditions, with no financing condition attached.

Arora is set to exchange his equity interests in the company for equity in the purchaser as part of the transaction. The special meeting for shareholder approval is expected to take place around March 12, 2024.

This significant development comes nearly three years after Farmers Edge went public in a $125.0 million IPO, which saw the issuance of 7.4 million common shares at $17.00 per share.

Farmers Edge, known for its focus on digital agriculture, provides farmers with cutting-edge solutions powered by a unique combination of field-centric data, artificial intelligence, and complete integration.

Information for this briefing was found via Farmers Edge and Sedar. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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