Atlanta based Americold Realty Trust (NYSE: COLD), the world’s largest publicly traded REIT focused on the ownership, operation, acquisition and development of temperature-controlled warehouses, announced that it has entered into a definitive agreement to acquire privately held Agro Merchants Group from an investor group led by funds managed by Oaktree Capital Management, L.P. for a total of $1.740 billion. The acquisition is subject to customary and regulatory closing conditions and closing is expected to occur late in the fourth quarter of 2020 or early in the first quarter of 2021.
Agro is the fourth largest temperature-controlled warehouse company globally, the third largest in Europe, and the fourth largest in the United States, and serves over 2,900 customers across a diverse spectrum of commodities. Agro’s portfolio consists of 46 facilities, totaling 236 million refrigerated cubic feet, located in 10 countries and will be a strong complement to Americold’s existing global network.
“We are very excited to welcome the Agro team to the Americold family as we expand the scale and enhance the geographic reach of the Americold network. The acquisition of Agro represents a unique opportunity to acquire an institutional-quality global portfolio that facilitates our strategic entry into Europe and adds complementary locations in the US, South America and Australia, where Americold is already established. This strategic transaction provides exciting long-term growth opportunities through our ability to implement the Americold Operating System and commercial business rules across the Agro platform. In addition, we are excited about the external development and M&A opportunities that this acquisition provides,” stated Fred Boehler, President and Chief Executive Officer of Americold Realty Trust.
“I am extremely proud of the work we have done to build Agro into a true industry leader in temperature-controlled logistics with a global portfolio,” stated Carlos Rodriguez, Chief Executive Officer of Agro Merchants Group. “Americold has one of the strongest networks in the world with leading operational capabilities. We are confident that by joining Americold, we will accelerate our growth and by combining our complementary networks, we will be able to provide a more comprehensive range of solutions to customers around the world.”
“We have always admired Americold as leaders in the cold storage sector, and we believe that the combination of Agro’s portfolio with Americold’s operating system and global platform creates an extremely compelling growth story. For this reason, we will retain a meaningful equity position and look forward to participating in what we expect to be significant shareholder value creation over the long term,” said Zach Serebrenik, Managing Director at Oaktree.
Americold expects this transaction to benefit the Company in several key areas:
• Expands Americold’s strategic footprint into Europe, with established access to the European food logistics network;
• Positions Americold to more effectively serve multinational customers on a global scale, adding key European and eastern U.S. port-advantaged locations, and strengthening the Company’s existing market position in Australia and South America;
• Diversifies the Company’s customer base and expands our fresh produce offering and market position, while increasing wallet share with key customers;
• Expected to be modestly accretive in 2021 withsignificant long term benefits and value creation through the operational integration of an aggregated portfolio by implementing the Americold Operating System (AOS), commercialization practices, and synergy realization;
• Embedded M&A, expansion and development provide opportunities for future growth, and;
• Alignments of interest as Oaktree and Agro management are taking 14.2 million shares in COLD common stock subject to lockup until May 17, 2021.
Upon closing, Americold’s portfolio, including owned and managed sites, will consist of 229 facilities totaling approximately 1.35 billion refrigerated cubic feet, with a global network spanning four continents.
Overview of the Agro Portfolio
The Agro portfolio has 26 facilities in Europe totaling 111 million refrigerated cubic feet, located in the United Kingdom, Netherlands, Portugal, Ireland, Austria, Spain, and Poland. The portfolio has 17 facilities in the United States, totaling 115 million refrigerated cubic feet in six southeastern states, New Jersey, and California. Agro also has two facilities in Brisbane, Australia and a 65% interest in a one facility operator in Chile. The portfolio also includes a 22.1% interest in a joint venture with Comfrio Soluções Logísticas, which operates 13 facilities throughout Brazil. As part of this transaction, Americold will acquire Agro’s in place call options to purchase the unowned interests in Chile and Brazil.
The acquisition is valued at approximately $1.740 billion, consisting of $554.3 million in Americold common shares, which will be subject to a lockup period until May 17, 2021, $519 million in cash, repayment of approximately $560 million of in-place Agro debt and assumption by us of approximately $110 million of in-place Agro capital leases and sale leaseback financing obligations, off-set by any cash on hand net of debt-like items and working capital adjustments.
Based on estimated 2020 adjusted results (including historical results through July), Americold underwrote the transaction assuming a net entry NOI yield of approximately 6.3% and an implied Adjusted EBITDA multiple of 22.3x, taking into account Agro’s transformation and reorganization initiatives, corresponding cost savings, recent commercial enhancements and new business wins and the elimination of other non-recurring, one time charges. Americold expects the NOI yield to stabilize at 7.3% -8.3% by the end of year five after closing.
Citigroup is acting as exclusive financial advisor to Americold. King & Spalding LLP and Freshfields Bruckhaus Deringer are acting as legal advisors to Americold. Moelis & Company LLC is acting as exclusive financial advisor to Agro Merchants Group. Latham & Watkins LLP is acting as legal advisor to Agro Merchants Group.