Farmers Edge Inc. FDGE-T is joining the growing list of technology companies that flocked to public markets during the pandemic only to consider retreating to private ownership.
The Winnipeg-based agriculture technology provider, which debuted on the Toronto Stock Exchange in March, 2021, at $17 a share, disclosed late Thursday that it is in talks with Fairfax Financial Holdings Ltd. FFH-T to sell its outstanding shares for $0.25 a share, representing less than 1.5 per cent of its initial public offering price. Fairfax already owns more than 61 per cent of the company.
The company stressed the talks “are in a preliminary stage, and no decision has been made,” though Farmers Edge has largely failed to attract meaningful investor interest during its brief time as a public company. One year after its IPO, the company’s shares had lost roughly 80 per cent of their value. Last month, the stock hit an all-time low of just 8 cents a share.
The decline is an exceptionally sharp contrast to the overwhelmingly positive reception the company got from investors initially, having received roughly $900-million worth of orders for the $100-million in stock Farmers Edge had planned to sell during its first day of trading.
If Fairfax is successful in taking the company private, Farmers Edge would become the latest tech company that went public during the pandemic IPO boom to retreat from public markets.
On Monday, Q4 Inc. QFOR-T became the sixth TSX-listed technology company to be taken private out of the 20 that went public from mid-2020 through late 2021. Toronto-based Q4, which creates software to allow public companies to hold shareholder meetings online, agreed to a buyout at $6.05 a share from Silicon Valley-based Sumeru Equity Partners.
Valuing Q4 at $257-million, the deal was priced at barely more than half of the company’s $12-a-share IPO price from October, 2021.
Founded in 2005, Farmers Edge collects data on a range of crop, land and weather conditions from sensors on 23 million acres of farmland in six countries, which farmers can use to increase their efficiency and plan more accurately. The company had 417 employees as of the end of 2022.
Last week, Farmers Edge announced a third-quarter net loss of $17.9-million. While that is narrower than the $21.1-million the company lost during the same period in 2022, the company had pledged at the time of its IPO to at least break even within two years.
Farmers Edge was also financed prior to the IPO by Mitsui & Co. Ltd. and Toronto-based Osmington Inc., which is controlled by David Thomson. (Woodbridge Co. Ltd., the Thomson family holding company, owns The Globe and Mail.)
Osmington chief executive Lawrence Zucker served on the company’s board of directors from 2015 until Dec. 17, 2021. According to the Farmers Edge 2022 annual report, published on March 14 of this year, Osmington no longer held the 5-per-cent ownership stake in the company that it needed to nominate a director to the board.