Farmers Edge announced that it has entered into an arrangement agreement with 15635594 Canada, a newly-formed subsidiary of the company’s majority shareholder, Fairfax Financial Holdings Limited (FFHL) and FFHL, as guarantor, in respect of a transaction whereby 15635594 Canada will acquire all of the common shares in the capital of Farmers Edge, other than those common shares owned by FFHL and its affiliates and the Farmers Edge Chief Executive Officer at a purchase price of C$0.35 per common share, payable in cash.
This announcement is the culmination of the negotiations that took place following the receipt by the board of directors of Farmers Edge on November 16, 2023, of an initial proposal from Fairfax at C$0.25 per common share and the January 8, 2024 announcement of the signing of a letter of intent by the company and Fairfax in respect of the transaction. The signing of the arrangement agreement followed the unanimous recommendation of the special committee of independent directors of the Board.
The purchase price represents a 218% premium to the closing price and to the 20-day volume weighted average price per common share on the Toronto Stock Exchange, in each case, of approximately C$0.11, as of the close of trading on November 15, 2023, being the trading day immediately before the company received the original proposal. The deal is to be effected by way of a court-approved plan of arrangement under section 192 of the Canada Business Corporations Act and is expected to close in the first quarter of 2024, subject to receipt of shareholder and court approvals and certain other customary closing conditions. Completion of the Transaction is not subject to any financing condition.
The Board – having received the unanimous recommendation of the Special Committee – determined (with R. William McFarland and Quinn McLean declaring their roles as directors or officers of Fairfax or an affiliate thereof, and Vibhore Arora declaring his interest in the deal given he will be exchanging his equity interests in Farmers Edge for equity of the 15635594 Canada and each abstaining that entering into the Arrangement Agreement is in the best interests of the company and the Board intends to recommend that the Company’s shareholders vote in favor of the Transaction at a special meeting of the shareholders to be held to approve the Transaction.
In connection with the review of the transaction, the Special Committee retained BMO Capital Markets as an independent valuator and financial advisor to provide financial advice and prepare a formal valuation of the common shares.
Following the completion of the deal, Farmers Edge expects to be de-listed from the Toronto Stock Exchange and to cease to be a reporting issuer in all provinces and territories of Canada.
