March 29, 2021

By Lynda Kiernan, Global AgInvesting Media

As AeroFarms’ co-founder and CEO David Rosenberg noted that the business is at an inflection point, the leading vertical farming company is merging with Special Purpose Acquisition Company (SPAC) Spring Valley Acquisition to list on the Nasdaq with expectations of an approximate value of $1.2 billion.

Moving forward, the new, combined company will continue to be led by Rosenberg. 

“Our goal was to partner with an industry-leading, best-in-class, sustainability-focused company and we are ecstatic to combine forces with AeroFarms, the market leader in vertical farming, to accomplish this vision,” said Chris Sorrelis, CEO, Spring Valley.

Founded in 2004 and headquartered in Newark, New Jersey, and as a Certified B Corporation since 2017, AeroFarms uses advanced technologies to take agricultural production to the next level without the use of soil, herbicides, pesticides, or fungicides. Employing proprietary technologies and software-controlled LED grow lights, AeroFarms’ vertical indoor farms grow crops suspended above a nutrient rich solution with water, oxygen, and nutrients misted onto the plants’ roots. This system allows AeroFarms to produce crops twice as fast as traditional farming, reflecting productivity 390 times greater per square foot, using 95 percent less water.

Nutrient uptake is closely monitored, and the company’s horticulturalists and engineers employ sensors and algorithms to collect plant data which is then analyzed to understand what inputs and factors cause certain crops to include particular traits and attributes – such as flavor or leaf texture – meaning AeroFarms can create bespoke crops  grown for customers’ particular needs.

Through the integration of plant biology, mechanical design, environmental control, data science, operations, and plant genetics, AeroFarms is able to disrupt traditional supply chains and solve issues born of macro challenges such as population growth, water scarcity, loss of arable land, and health consciousness by producing the highest-quality, hyper-local sustainably-sourced, and pesticide-free produce under its Dream Greens brand that can then be delivered year-round at its point of peak flavor and nutrition.

“At AeroFarms, our mission is to grow the best plants possible for the betterment of humanity, and we are executing on this by taking agriculture to new heights with the latest in technology, innovation, and understanding of plant science,” said Rosenberg.

“Our technology empowers our operations – this is how we get closer to where the problems, opportunities and solutions are,” he continued. “We also have the capabilities to innovate fast by turning our crops a typical 26 times per year that allows us to continuously learn and improve yield and quality while simultaneously reducing capital and operating costs.”

SPAC Attack

Vertical farming with its potential to disrupt long-standing food systems and promise of sustainable environmental and social impacts has gripped the investment sphere. And as funding rounds within the space reach into the hundreds of millions of dollars, companies have begun to look to access even greater levels of capital through SPAC-designed IPOs. 

Only last month vertical farming rival AppHarvest announced its merger with SPAC Novus Capital and its listing on the Nasdaq – a deal that valued AppHarvest at $1 billion, and provided $475 million to the company including $375 million fully committed common stock PIPE at $10 per share anchored by existing and new investors Fidelity Management & Research Company, Inclusive Capital, and Novus Capital Corporation, and others.

Upon completion of the merger, Jonathan Webb, founder & CEO, AppHarvest noted, “Today marks an important milestone for AppHarvest and for American agriculture as we drive the next chapter of our growth as a public company.”

Likewise for AeroFarms, this merger with Spring Valley and listing will value the company at about $1.2 billion (assuming no redemptions by Spring Valley shareholders) with the PIPE anchored by leading institutional investors, AeroFarms insiders, and Pearl Energy Investments, the sponsor of Spring Valley. It also will provide AeroFarms with approximately $317 million in unrestricted cash at close to fund the future development of vertical farms and for general corporate purposes.

“Our business is at an inflection point where we will scale up our proven operational framework and begin our expansion plans in earnest,” said Rosenberg. “With the support of Spring Valley, we not only have the capital in place to execute our plan, but also a sponsor who shares the same ESG philosophies to make a positive impact on the world, while serving the interests of our shareholders.”

Upon completion of the transaction, which has been unanimously approved by the Boards of both AeroFarms and Spring Valley, it is expected that AeroFarms will nominate Debora Frodl and Patrick Wood III, two existing directors with Spring Valley, to its Board, with the remaining directors and officers of Spring Valley to resign and be replaced with AeroFarms nominees to be named at a future date.

“AeroFarms has a 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,” said Spring Valley CEO Chris Sorrelis.

“Moreover, their team has been selling commercial product with major retailers, building a trusted brand that is performing well, and developing influential partnerships that will enhance their ability to scale this business quickly,” he continued. “The future is very bright for AeroFarms and we are excited to share this highly compelling ESG investment opportunity by bringing the market leader in the vertical farming industry public.”

– Lynda Kiernan is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, and HighQuest Group’s Oilseed & Grain News. She is also a contributor to the GAI Gazette. She can be reached at lkiernan@globalaginvesting.com.