AeroFarms to go public in $1.2B deal with Spring Valley SPAC

Newark-based vertical farming company AeroFarms will go public through a merger with special purpose acquisition company Spring Valley Acquisition Corp., with the combined entity valued at $1.2 billion.

The companies announced the deal March 26, and will trade on Nasdaq under the ticker ARFM.

Investors have committed $125 million to a private investment in public equity, or PIPE, in support of the transaction. The deal will provide about $317 million unrestricted cash to AeroFarms to fund future farm development.

“It’s a good day, and we’re most excited by the resources this brings to the company,” AeroFarms founder and CEO David Rosenberg said on the merger. “We look at this as a start to the next phase of our journey at AeroFarms. We’ve raised $200 million to date. We’ve been working to get the economics for leafy greens right,” he said, noting they’re on the fifth generation of their technology, with the sixth generation prototype ready to try. “Now it’s time to scale so lots of people have access to great fresh food.”

Compared to conventional fruit and vegetable farms, AeroFarms uses 95% less water—a critical resource—and requires no herbicides, fungicides, or pesticides. And because the produce is grown indoors with artificial light and heat, AeroFarms’ growing season isn’t subject to weather or time of year.

As much as it’s an agriculture company, AeroFarms is a tech company, too. In a prepared statement on the acquisition, Spring Valley CEO Chris Sorrells noted AeroFarms “technological edge on the industry, developing a world-class innovation team that has fueled a robust and growing intellectual property portfolio of patents and trade secrets.” Rosenberg said the numbers are 282, 51, and 45 in invention disclosures, patents and pending patents, and trade secrets, respectively.

“A cool example [of how we utilize technology] is a berry. We’ve grown about 50 different varieties of strawberries. A metric of quality of strawberry is brix, that quantifies sugars in a berry. An average berry at a supermarket has a brix content of 7, and our berries consistently have a brix content of 11,” Rosenberg said. “The way we achieve it is we can change how a plant is grown. The sugars are in the leaves, during the diurnal [nighttime] period, we change the temperature and humidity and the phytochemicals of the plant move from the leaves to the berry. That’s an example of the fully controlled nature of vertical farming. The data science allows us to not only grow plants, but grow the best quality plants.”

Current AeroFarms investors will roll 100% of their equity into the new public company. AeroFarms’s “Dream Greens” brand of vertically farmed vegetables is sold by retailers including Whole Foods Market and FreshDirect.

The boards of directors at both entities have approved the deal, which is now subject to the satisfaction of the approval of the shareholders of Spring Valley as well as other closing conditions. It’s expected to close in the second quarter.

JPMorgan Chase & Co. is acting as financial adviser to AeroFarms and Cowen & Co. is financial adviser to Spring Valley. JPMorgan, Cowen and Wells Fargo & Co. are acting as placement agents for the PIPE offering.

Rosenberg told NJBIZ he gives a lot of credit to his mother, with whom he had “a lot of conversations growing up about societal good and how to incentive people to do the right thing. I think business is a great catalyst to enact change.”

In New Jersey, the company will continue to grow, and there are currently openings.

“We just built our fifth building [in Newark]…a more comfy place for our engineering and R&D team. We are building a $100 million project in Abu Dhabi and we do see a regional focus in the Middle East. Newark will continue to be our headquarters—there’s no plan to change that,” Rosenberg said.